what is oasdi deduction

The OASDI (Old-Age, Survivors and Disability Insurance) tax is a U.S. tax that is levied on earned income to fund the Social Security program. It is a component of the Federal Insurance Contributions Act, along with the Medicare program, and is automatically deducted from paychecks. Established in 1935, the OASDI tax is designed to ensure workers have enough funds to support themselves in retirement or in other situations such as disability or death, when earned income is no longer a source of cash flow. By law, the OASDI tax must be automatically withheld from employee paychecks at a rate of 6.2%, and employers are required to pay a matching 6.2% — for a total tax of 12.4% . The accumulated funds are used to fund monthly benefits payments to Social Security program recipients. Self-employed workers pay the entire OASDI tax but can deduct half when they file taxes.