What Is the OASDI Tax on Your Paycheck?

damircudic / Getty Images

Commitment to Our Readers

GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.

20 Years
Helping You Live Richer

Reviewed
by Experts

Trusted by
Millions of Readers

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 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.

How Much Is the OASDI Tax?

For 2026, the total OASDI (Social Security) tax rate is 12.4% of earned income, a rate that has remained unchanged since 1990.

For most workers, this tax is split evenly between the employee and employer — 6.2% each. If you’re self-employed, you’re responsible for the full 12.4%, since you’re effectively paying both portions.

The benefits you’re eligible to receive later — whether in retirement or due to disability — are based on your lifetime earnings, up to an annual income cap set by the Social Security Administration.

Who Pays OASDI Tax?

Most workers and employers in the U.S. pay the OASDI tax. 

Both the employee and an 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?

• Self-employed individuals with very low earnings: If you earn less than $400 per year from self-employment, you generally don’t owe self-employment tax, including OASDI.
• Certain student workers: Students employed by the school they attend — such as through work-study or campus jobs — are often exempt from OASDI taxes.
• Religious organizations and clergy: Religious organizations themselves aren’t subject to OASDI taxes. However, clergy members are typically treated as self-employed and must pay self-employment tax on their earnings.
• Some state and federal employees: Government workers covered by a public retirement system may not pay OASDI taxes. Instead of Social Security benefits, they usually receive retirement benefits through their employer’s plan.

Some legal nonresidents may not have to pay this tax. You can see the full list of exemptions for more information.

How OASDI Shows Up on a Paycheck

Lower-income example (paid weekly)This employee earns $75,000 per year and is paid weekly, which comes out to $1,442.30 per paycheck before taxes. Each week, 6.2% of their pay goes toward OASDI, so $89.42 is withheld from each paycheck. The employer also contributes $89.42 per week, matching the employee’s OASDI tax.

Higher-income example (paid biweekly)This employee earns $250,000 per year and is paid every two weeks, for a gross paycheck of $9,615.38. Because their income exceeds the 2026 OASDI wage cap of $168,600, OASDI tax applies only to earnings up to that limit.

Over the course of the year, a total of $10,453.20 (6.2% of $168,600) is withheld for OASDI. Spread across 26 paychecks, that equals $402.05 per paycheck until the wage cap is reached. After that point, OASDI withholding stops for the rest of the year.

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 gap.

Can You Reduce Your OASDI Tax?

OASDI taxes only apply up to an annual income cap. If you earn more than $176,100, income above that amount isn’t subject to OASDI tax.

If you’re self-employed, you generally pay the full OASDI tax yourself, but you may be able to deduct part of that cost on your tax return.

If you’re already receiving Social Security benefits, you don’t pay OASDI taxes on that income.

Keep in mind, though, that not paying OASDI taxes — whether because you’re exempt or earn income outside the system — can affect your future eligibility and benefit amount. Social Security benefits are based on your work history and contributions over time.

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. 

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

Share This Article: