OASDI on Your Paystub: How Much You’re Paying and Why

OASDI on pay stubs stands for Old-Age, Survivors, Disability Insurance (OASDI). It is a federal tax used to help generate funds for the government’s retirement, survivor, and disability benefit programs.

OASDI is also often labeled as the Social Security tax on employee paychecks, and it represents one of the mandatory deductions withheld from workers’ wages.

Knowing precisely what OASDI means on a paycheck stub and how taxation works is vital for employees to understand where their hard-earned money goes.

Read on if you want to learn more about the meaning of OASDI on a paycheck and how it impacts your responsibilities as a taxpayer and worker in the US.

Key Takeaways

• OASDI on pay stubs is also known as Social Security tax on employees’ pay stubs. It is a pay stub abbreviation representing one of the mandatory taxes levied on employee wages.
• The OASDI withholding amount follows a shared 6.2% tax rate for employees and employers or 12.4% for self-employed individuals.
• OASDI tax payments help fund the federal government’s financial assistance for people in old age and their disability and survivor benefit programs.

What is OASDI Tax?

OASDI tax or program is another term for the Social Security payroll taxes, which are one of the tax obligations for employers and employees mandated under the Federal Insurance Contributions Act (FICA).

OASDI on a pay stub is one of the pay stub tax deductions or payroll taxes commonly reflected on employee paychecks.

By paying OASDI payroll taxes, employers and employees help fund the following programs and benefits:

• Financial assistance for people in old age. This benefit is a monthly pension that eligible contributors receive once they reach retirement age.

• Survivor benefits. It is given to the survivors of a deceased individual or taxpayer who regularly paid Social Security taxes. The more contributions an individual has made to their OASDI taxes, the bigger the percentage that goes to their survivor benefits.

• Disability benefits. The disability benefits are given to workers aged 50 to 65 and disabled children of insured workers who are either retired or deceased.

• Lump-sum death payment or insurance. This payment type is given to a contributor's surviving child or spouse, provided that they meet the set qualifications for this benefit.

The OASDI program is administered by the Social Security Administration (SSA).

OASDI vs. Medicare

The Medicare and OASDI taxes on paychecks comprise the FICA taxes, which are split between employers and employees.

As mentioned earlier, the OASDI program is meant to aid retired workers, people with disabilities, and senior citizens.

On the other hand, Medicare is federal health insurance for individuals aged 65 or older. Individuals younger than 65 may also qualify for the Medicare program if they have specific disabilities.

How Does OASDI Tax Work?

OASDI taxes are levied on employers and employees, which split the 12.4% tax rate. They must pay 6.2% each in OASDI or Social Security taxes.

For example, if an employee earns $3,250 in a given pay period, their employer must multiply their earnings by 6.2%.

In that regard, the employee’s OASDI tax is as follows:

• $3,250 taxable earnings X 6.2% OASDI tax rate = $201.5 OASDI tax payment

Since the employer must match the employee’s portion or share of the OASDI tax payment, they must multiply the same amount as their employee’s income by 6.2%. In short, they must also pay $201.5 for their Social Security tax.

Notably, the 6.2% tax rate only applies to employee and employer earnings within the wage base limit, which is $168,600. The limit is also said to increase in 2025 to $174,900.

Taxpayers whose earnings exceed the wage base limit are not required to pay Social Security tax.

Meanwhile, when depositing OASDI taxes, employers either deposit them semiweekly, monthly, or quarterly, depending on their required schedule and tax liability.

Employers must also file Form W-2, Wage and Tax Statement, and Form 941, Employer’s Quarterly Federal Tax Return, to report all withheld FICA taxes on their employees’ wages.

The OASDI employer contribution must always match their employees' contributions because it is their legal responsibility.

How to Read OASDI Tax on Your Paystub

The key to reading OASDI tax on your pay stub is to look for the section labeled Employee Taxes or Employee Tax Deductions in your paycheck stub.

OASDI on a pay stub is one of the standard pay stub abbreviations that every employee must be familiar with because it represents some of the required federal deductions applied to their wages.

Employers typically organize their workers' pay stub information so that all income-related details are grouped together.

Meanwhile, mandatory deductions such as taxes and voluntary deductions like health insurance, 401k, or other variations of retirement benefits are also combined in separate groups.

You might notice that your employer will use FICA-OASDI or FICA-Social Security to refer to OASDI on your pay stub. You will also notice that the tax amount withheld for your OASDI tax on your pay stub will yield the same amount since the Social Security taxes follow a fixed rate.

The only time that your OASDI tax deductions will increase or change is if your salary increases or if the Social Security tax rate increases.

Is OASDI Tax the Same as Social Security Tax?

The OASDI tax on paychecks is the same as the Social Security tax. In fact, asking the question, ‘What is OASDI?’ will yield similar answers when you search for the definition or purpose of the government’s Social Security program.

When Was the Term ‘Social Security’ First Introduced?

Abraham Epstein, an economist and founder of the American Association for Social Security, was the first to introduce the term “Social Security” in modern vernacular, and the term was initially envisioned as a retirement program.

Aside from explaining how the term ‘Social Security’ came to be, below is a brief history lesson to help you better understand why Social Security and OASDI refer to the same program:

OASDI Program’s Historical Background

During the early 1930s, Dr. Francis E. Townsend, a physician based in California, proposed the Townsend Plan, which aimed for US citizens aged 60 and up to be granted $200 financial support.

Dr. Townsend’s proposal sparked the Townsend-Old Age Revolving Pension Plan Movement, leading then-President Franklin Roosevelt and Congress to adopt and implement a social insurance plan.

President Roosevelt believed social insurance was the key to resolving the country’s need for economic stability. The Social Security program followed a contributory tax system that allowed workers to build their economic security in the future.

On August 14, 1935, President Roosevelt signed the Social Security Act (originally called the Economic Security Act) into law. In 1939, the Act was amended to include benefits for the spouse and children of the retiree, as well as survivor benefits.

Interestingly, when the Old Age, Survivors, and Disability Insurance program was first introduced in 1935, it did not yet include disability insurance or benefits.

It was only after the 1956 Amendments to the Social Security Act were enacted into law on August 1, 1956, that the Social Security Disability Program was established.

OASDI Tax for Self-Employed and Non-Resident US Citizens

The OASDI tax for self-employed and non-resident US citizens differs from how Social Security is levied on regular employees.

Social Security or OASDI taxes comprise the self-employment taxes or the FICA tax counterpart that independent contractors must withhold from their earnings.

The self-employment tax rate for 2024 is 15.3% (12.4% for Social Security tax and 2.9% for Medicare tax). Self-employed individuals must pay the entire Social Security and Medicare tax rates.

On the other hand, sole proprietors and self-employed individuals who are part of an S-Corporation or a Partnership pay their OASDI taxes through the SECA (Self-Employment Contributions Act).

Self-employment taxes are also among the different expenses that may be claimed as tax deductions for independent contractors.

OASDI Tax for Non-Resident US Citizens

The IRS levies OASDI tax and Medicare taxes on non-resident US citizens or aliens performing services in the United States. However, there are specific exceptions based on a nonresident’s immigration status.

For instance, nonresident alien teachers, researchers, trainees, summer camp workers, and other professionals classified under the J-1 and Q-1 visa status are exempt from OASDI and Medicare taxation during the first two calendar years of their stay in the U.S.

The J-1 visa status is for cultural and educational exchange programs facilitated by the Department of State, while the Q-1 visa status is reserved for nonresidents participating in international cultural exchange programs.

Once the two-year time frame is completed, they may be liable to pay OASDI taxes. At the same time, once nonresident researchers, teachers, and trainees change their J-1 or Q-1 status to a different visa status, they usually become liable for FICA taxation.

Exemption from paying OASDI taxes only applies to the wages paid in exchange for the services they have completed within the U.S.

Meanwhile, foreign researchers, teachers, and other workers or professionals under the O-1 or TN visa status must pay OASDI and Medicare taxes. The O-1 and TN visas are examples of temporary worker visas given to nonresident US citizens.

Self-employed nonresident aliens are not required to pay self-employment taxes unless they legally change their residency status to a Resident Alien.

Is OASDI Tax Mandatory?

OASDI tax is mandatory because it is instrumental in ensuring continuous funding for programs meant to benefit persons with disabilities, retired individuals, and survivors of retired and disabled workers who contributed to Social Security and Medicare taxation.

All workers—even self-employed individuals—are bound to benefit from contributing to the OASDI and Medicare programs.

Let’s put it this way: The Social Security and Medicare taxes you are paying today help fund the benefits of disabled workers and taxpayers who are about to reach retirement age.

In the future, your retirement and disability insurance (if applicable) will also be funded by employees following in your footsteps.

Conversely, if you do not find OASDI on your pay stub despite being paid regular wages by an employer, it is possible that your employer may not have been withholding FICA taxes from your earnings.

As such, you must contact your state labor department and report any discrepancies.

Final Thoughts

Now that you know the meaning of OASDI on a pay stub, you must see that you regularly pay the said tax to avoid accumulating tax liabilities or triggering a potential IRS audit later on.

Whether you’re an employer, an employee, or a self-employed individual, uncovering what OASDI on pay stubs means helps you see the bigger picture regarding your obligations as a regular taxpayer.

More importantly, getting familiarized with the different taxes applicable to your earnings based on your employment status and income tax bracket is the key to understanding the scope of your labor rights and social responsibility as a US citizen.

OASDI on Paystub FAQ

#1. Can I get my Social Security tax back if I’ve overpaid it?

Yes, you can get a Social Security tax refund if you overpaid it or if an excess amount of Social Security tax payment is withheld from your earnings.

If you notice that your employer made a mistake in withholding Social Security taxes from your income, you must contact them and request a refund.

You can also contact the IRS and file Form 843, Claim for Refund and Request for Abatement, and Form 8316.

#2. Why is OASDI taken out of my paycheck?

OASDI is taken out of your paycheck because it is one of the taxes imposed by the federal government. OASDI taxes on a pay stub help provide funding for eligible recipients of the government’s retirement and disability programs.

#3. Does the OASDI Tax cover retirement expenses?

Yes, the OASDI tax helps cover retirement expenses. The OASDI taxes withheld on your paycheck go to the disability and retirement payments for disabled and retired individuals.

Later on, when you retire or if you meet the eligibility criteria for disability benefits, your OASDI payments will also be generated from the Social Security taxes withheld from succeeding employees’ earnings.

#4. Do I get OASDI tax back?

Yes, you can get your OASDI tax back, particularly if your employer withholds more than the required amount from your earnings to pay your OASDI or Social Security taxes. Paying excess OASDI taxes is also typical if you are employed in two or more jobs.

#5. Can I opt out of OASDI or Social Security tax?

Opting out of paying OASDI or Social Security taxes is highly improbable because it is a mandatory tax that almost all U.S. citizens or Americans must pay.

However, some individuals are exempt from paying OASDI taxes. These include self-employed individuals who earn less than $400, certain religious group members, and taxpayers who are only required to pay OASDI tax on wages above a specific income threshold.