What is the OASDI tax on your paycheck?

The OASDI tax funds Social Security. It stands for Old-Age, Survivor and Disability Insurance.

It's better known as the Social Security Tax, and is one of the two FICA (Federal Insurance Contributions Act) taxes paid on a worker's income. Medicare taxes make up the other (and smaller) portion of the FICA taxes. FICA tax rate .

You might qualify to receive payments from Social Security if you’re retired or disabled. You can also qualify for survivor benefits from Social Security if an eligible family member dies.

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What is the amount of the OASDI tax?

The total OASDI tax for 2025 is 12.4% of your income — the percentage has remained unchanged since 1990.

The tax is split between the employee and the employer. So, you pay 6.2% and your employer pays 6.2% of your income. People who are self-employed will pay the whole 12.4%.

When you retire or become disabled, the amount you can collect is based on the amount you earned while working, up to a specific limit.

Who Pays OASDI Tax?

Most workers and employers in the United States pay the OASDI tax.

Both the employee and the employer pay equal portions of the OASDI tax burden. The employee’s portion of the OASDI tax is deducted from their paycheck automatically, and the employer pays their portion during the payroll process.

Self-employed individuals will pay the full amount of their OASDI tax. They have two options for doing so:

• They can pay these taxes through their own payroll filing, which they may do if paying themselves a salary through their own business.
• They can pay these taxes through their estimated quarterly payments, or their annual federal tax return.

Who Doesn’t Pay the OASDI tax?

• Freelancers or independent contractors who have earned less than $400 per year from their activities.
• Students employed by the school where they're studying (which may include student work programs).
• Religious organizations are not taxed, though clergy members are considered self-employed and must pay the self-employment tax on their income.
• State or federal employees who are covered under a public retirement plan usually don’t pay OASDI. This is because when they retire, they will collect benefits from their retirement plan, and not from Social Security.

Some legal nonresidents may not have to pay this tax; you can see the complete list of exceptions for more information.

OASDI Tax Example

Joe earns $75,000 per year and gets paid every week. His gross pay is $1,442.30 per week. Every week, $89.42 is withheld from his paycheck for the OASDI tax, which is 6.2% of $75,000 divided by 52 weeks. His employer also pays $89.42 in OASDI tax each week.

Jane earns $250,000 per year and is paid every two weeks. Her gross pay is $9,615.38 every two weeks. Because her income is over the OASDI cap of $168,600, she only pays OASDI tax on the first $168,600 of her income. Therefore, the amount withheld from each of her paychecks is $402.05, which is 6.2% of $168,600 ($10,453.20) divided by 26 paychecks.

How OASDI Benefits Are Calculated

Approximately 85 cents of every Social Security dollar you pay goes into a trust, which pays monthly benefits to current program beneficiaries, including retirees and surviving family members who lost a spouse or parent. Approximately 15 cents of every dollar goes into a trust that pays those with disabilities. A small portion of the tax is used to manage the program.

When you apply for Social Security, the amount you get approved for will depend on your income throughout your life. You can submit up to 35 years of earnings to consider and the administration will pick the ten years you earned the most.

OASDI vs. Medicare Tax

OASDI is one of two types of taxes known as FICA or Federal Insurance Contributions Act. The other goes to Medicare. The Medicare tax is 1.45% of your paycheck and has no wage limit.

Can You Reduce Your OASDI Tax?

• If you make more than $176,100, every penny after that will not be taxed.
• If you are self-employed, you might be able to write off OASDI taxes .
• If you are receiving Social Security benefits, you don’t have to pay OASDI taxes.

If you plan to take Social Security benefits at some point in your life, not paying OASDI taxes can reduce your eligibility.

Final Take

OASDI tax seems like a big chunk out of your paycheck , especially if you are self-employed. But withholding these funds is important, as it pays for the income you’ll get from Social Security if you are disabled or when you retire. While Social Security doesn’t replace all of the income you earned in your working years, it is an important safety net for most Americans.

To see how much you're paying into the OASDI tax, you can review your paycheck or your federal tax returns.

FAQ

Here are the answers to some of the most frequently asked questions regarding OASDI tax and other tax topics.

• OASDI stands for Old Age, Survivors, and Disability Insurance.
  • OASDI stands for Old-Age, Survivors and Disability Insurance.
• The OASDI (Old-Age, Survivors, and Disability Insurance) tax rate for 2025 has not been officially announced yet. Historically, it has remained at 6.2% for the employee portion and 6.2% for the employer portion, making a total of 12.4% as of 2023 and 2024. However, for the most accurate and up-to-date information, you should check with the Internal Revenue Service (IRS) or other official sources closer to 2025.
  • It is 12.4% for self-employed people and 6.20% for employed people.
• Do I have to pay OASDI tax if I am self-employed?
  • Yes. You have to pay 12.4% if you're self-employed.
• Can I opt out of OASDI tax?
  • While there are exemptions to the OASDI tax—such as those making under $400 from self-employment income or students employed by their school—there is no option that allows qualifying workers to "opt-out." The OASDI is a required tax, though eligible workers may try to request an exemption.
• What happens if I reach the OASDI wage cap?
  • You won't have to pay OASDI taxes on the money you make after you hit the wage cap.
• How does OASDI affect my Social Security benefits?
  • Your OASDI taxes fund Social Security benefits.
• Yes, OASDI tax is different from Medicare tax.
  • Yes. It is a separate tax.

Karen Doyle and Daria Uhlig contributed to the reporting for this article.

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