What It Is, How It Works And Who Pays It

You won’t see the term “OASDI tax” mentioned as frequently as the many other types of taxes you regularly pay — but whether or not you realize it, you’re paying this tax with every single paycheck you receive.

OASDI, short for Old-Age, Survivors, and Disability Insurance, is more commonly known as Social Security. OASDI tax is collected from workers’ paychecks to fund the Social Security program run by the Social Security Administration. Self-employed people also must pay this tax.

What is OASDI tax?

OASDI tax is a mandatory payroll tax that funds the Social Security program. While the Social Security Administration is still operating the Old-Age, Survivors, and Disability Insurance program, it’s more commonly known as Social Security.

The IRS collects OASDI tax and then passes this money along to the Social Security Administration, which pays out benefits that help support people following retirement, a disability or the death of a spouse or parent.

Whether it’s referred to as OASDI or Social Security, the tax rate is the same: 12.4 percent. The tax bill for OASDI is split between employers and employees, meaning each party pays 6.2 percent. But people who are self-employed must pay the entire 12.4 percent tax rate.

The tax doesn’t apply above a certain income threshold (more on that below).

OASDI and Medicare taxes are the FICA payroll taxes that fund each program. The Medicare tax rate is 2.9 percent as of 2025 — that amount is evenly divided between employer and employee. That 2.9 percent for Medicare plus 12.4 percent for Social Security adds up to a total FICA tax rate of 15.3 percent.

Who pays OASDI tax?

Employers and employees are jointly responsible for paying the 12.4 percent OASDI tax. Employers deduct 6.2 percent of an employee’s earned income for OASDI or Social Security tax, and then the employer must also pay 6.2 percent to the IRS.

OASDI tax and Medicare tax are the two taxes that make up FICA taxes, which are automatically deducted from the paychecks of all employees, with very few exceptions.

Taxpayers who are self-employed are responsible for paying the self-employment tax of 15.3 percent, which includes Social Security and Medicare taxes, along with their income taxes. (The IRS expects self-employed people to pay estimated taxes each quarter.)

How does OASDI tax work?

For taxpayers who are employees, OASDI tax is automatically deducted from your paycheck each pay period. You split the 12.4 percent tax bill with your employer, so 6.2 percent of your earned income is deducted from your paycheck for OASDI tax.

The paystub you receive from your employer should list all of the deductions from your paycheck, including the amounts withheld for federal and state income taxes, Medicare tax and Social Security (or OASDI) tax. While you can adjust the amount of money withheld for federal income tax, you can’t adjust the amount withheld for OASDI or Medicare taxes.

If you’re self-employed, you’ll need to set aside 12.4 percent of your earnings for OASDI tax and include this amount with the estimated taxes you pay to the IRS each quarter.

Although you’ll pay this tax while working, you’ll ideally reap the benefits at a future date: That’s because the Social Security Administration tracks the lifetime earnings associated with your Social Security number to monitor your eligibility for benefits. The amount of money you’ll receive in Social Security benefits after retirement or when receiving disability will be determined by your lifetime earnings.

What is the OASDI limit in 2025?

There is an income limit for Social Security tax, beyond which you don’t have to continue paying. The Social Security Administration adjusts this income limit each year. In 2025, the maximum income on which you must pay this tax is $176,100. That’s up $7,500 from the $168,600 income limit in 2024.

The total amount of OASDI tax collected for a taxpayer earning $176,100 or more in 2025 is $21,836.40. If you’re self-employed, you’ll foot that entire tax bill yourself, whereas if you’re an employee of an organization, you’ll split that amount with your employer, for a tax obligation of $10,918.20 for each of you.

One important note is that while there’s an income tax limit for OASDI tax, there isn’t a comparable limit for Medicare tax. No matter your income, the 2.9 percent Medicare tax rate will apply — 1.45 percent for the employee and 1.45 percent for the employer or the full amount for taxpayers who are self-employed.

Also, there’s an additional Medicare tax of 0.9 percent for people who earn $200,000 or more ($250,000 if married filing jointly; $125,000 if married filing separately).

Tracking your OASDI taxes

For employees, you can see the amount of money deducted from your paycheck each pay period for OASDI tax — and this information is also included on your year-end W-2 form that your employer sends to you.

As an employee, you should never pay more than a 6.2 percent tax rate for Social Security or OASDI.

If you’re self-employed, you must pay the full 12.4 percent tax rate on earnings up to $176,100 in 2025 — and you should expect this income limit to increase each year.

It’s your earnings, not the amount of OASDI tax you pay over the course of your working years, that will determine your Social Security benefits. You can quickly estimate the benefits you might be eligible for using this Bankrate Social Security calculator or you can track your lifetime earnings by creating an account with the Social Security Administration.