what is oasdi tax

The Old-Age, Survivors, and Disability Insurance (OASDI) tax is a U.S. tax levied on earned income to fund the Social Security program. It is a component of the Federal Insurance Contributions Act (FICA) and is automatically deducted from paychecks. The OASDI tax rate for wages paid in 2024 is set at 6.2% for employees and employers, each, totaling 12.4%. Self-employed individuals are required to pay the entire 12.4% tax on their earned income. The tax is designed to ensure workers have enough funds to support themselves in retirement, disability, or in the event of death when earned income is no longer a source of cash flow. The tax has remained at 12.4% since 1990, and the amount of earnings subject to taxation is limited each year.