{"id":353892,"date":"2023-08-29T14:54:22","date_gmt":"2023-08-29T19:54:22","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/socialsecurity\/basics\/what-is-oasdi.html"},"modified":"2026-03-16T16:07:34","modified_gmt":"2026-03-16T21:07:34","slug":"what-is-oasdi","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/socialsecurity\/basics\/what-is-oasdi.html","title":{"rendered":"What Is OASDI?"},"content":{"rendered":"\n
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What Is OASDI?<\/h1>\n\n
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\n By Hannah Hilst<\/a> | Legally reviewed by Jennifer Steinberg, Esq.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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The Old-Age<\/span>, Survivors, and Disability Insurance<\/span> (OASDI) program<\/span> is the official name of the Social Security system<\/span>. Workers pay OASDI taxes<\/span> out of their wages or self-employment income. OASDI provides monthly benefits<\/span> to millions of Americans, including retirees<\/span>, workers with disabilities, and their dependents<\/span>. It also provides benefits to the surviving spouses<\/span> and children of deceased workers<\/span>.<\/p>\n\n <\/div>\n\n\n\n

The Social Security Act<\/span> of 1935 and later amendments created the Old-Age<\/span>, Survivors, and Disability Insurance<\/span> program. Most people know this federal benefits program as OASDI or\u00a0Social Security.<\/p>\n

The OASDI program<\/span> receives income from payroll taxes<\/span>. The majority of payouts go to monthly benefits<\/span>. The rest goes to other costs, including\u00a0lump-sum death payments<\/a>. The Social Security Administration<\/span> (SSA<\/span>) oversees this system.<\/p>\n

There\u2019s a lot to learn about Social Security. You might wonder how much of your paycheck goes toward this program and whether it will benefit you in the future. This article explains the OASDI program<\/span>, including payroll <\/span>tax<\/span> rates<\/span> and Social Security credits.<\/p>\n

Understanding the Social Security programs<\/span> can help you make informed decisions about retirement planning<\/span>. You can learn about what benefits you or your family members<\/span> may be eligible to receive. For personalized advice about applying for benefits, you can speak with a Social Security benefits<\/span> lawyer<\/a>.<\/p>\n

How OASDI Taxes<\/span> Affect Your Paycheck<\/h2>\n

You may have noticed a line item on your paystub for an \u201cOASDI tax<\/span>\u201d or \u201cFICA tax<\/span>.\u201d This amount is withheld from employees\u2019 paychecks<\/span> for Social Security taxes<\/span>.<\/p>\n

The OASDI tax<\/span> is mandatory for employees, employers, and the self-employed. Internal Revenue Service<\/span> (IRS<\/span>) statute determines OASI tax rates<\/span>. This federal tax<\/a> revenue is transferred to the U.S. Treasury for eventual disbursements.<\/p>\n

OASDI <\/span>Tax<\/span> Rate<\/span> for Employees and Employers<\/h3>\n

An employee contributes to OASDI through payroll taxes<\/span> under the Federal Insurance Contribution Act<\/span> (FICA). An employee pays a mandatory\u00a0FICA\u00a0Social Security tax<\/span><\/a> of 6.2% and a Medicare tax<\/span> of 1.45% for a total of 7.65%. The employer\u2019s share matches the employee\u2019s contribution.<\/p>\n

OASDI <\/span>Tax<\/span> Rate<\/span> for Self-Employed Individuals<\/span><\/h3>\n

People who work for themselves contribute through self-employment taxes<\/span><\/a> under the Self-Employment Contributions Act<\/span> (SECA<\/span>). The SECA<\/span> tax rate<\/span> is 15.3% in 2026.<\/p>\n

Self-employed workers<\/span> pay a rate twice as high as regular employees because they must pay the total tax for both employees and employers under SECA<\/span>. Self-employed people<\/span> receive a tax deduction<\/span><\/a> in exchange for the higher federal income <\/span>tax<\/span> rate<\/span>.<\/p>\n

The Wage Base<\/span> Cap on Taxable Income<\/h3>\n

The federal government places a\u00a0ceiling on earnings\u00a0subject to OASDI taxation. The OASDI ceiling in 2026 is $184,500. The tax will apply to earnings up to that maximum amount. Additional earnings above this amount are not taxable for OASDI.<\/p>\n

The taxable maximum<\/span><\/a> amount fluctuates. The SSA<\/span> uses the national average wage index to calculate the cap. If workers\u2019 wages increase on average, the taxable maximum<\/span> amount rises as well.<\/p>\n

Who Is Exempt from Social Security Taxes<\/span>?<\/h3>\n

Members of certain groups receive an exemption from paying Social Security taxes<\/span>. This includes members of religious groups, including the Amish and Mennonites. These individuals must apply for an exemption through the SSA<\/span>.<\/p>\n

Nonresident immigrants are generally liable for OASDI and Medicare taxes<\/span>. Yet, a few exceptions exist for workers with certain types of visas and employment<\/a>. These visas mainly cover students, scholars, and foreign <\/span>government<\/span> employees<\/span>.<\/p>\n

OASDI Cost-of-Living Adjustments<\/h2>\n

As daily expenses rise due to inflation, the SSA<\/span> may need to raise its payments to Social Security beneficiaries<\/span>. Once per year, the law requires the SSA<\/span> to recalculate OASDI benefits<\/span>.<\/p>\n

The SSA<\/span> uses the annual consumer price index to decide this change. If the index shows higher prices that year, the SSA<\/span> will issue a cost-of-living adjustment (COLA). Without an increase, there is no COLA.<\/p>\n

If you are a recipient of OASDI, the COLA can affect the amount of your monthly benefits<\/span>. For example, if the SSA<\/span> issues a 3% COLA, a $2,000 monthly benefit<\/span> would become $2,060 instead. The actual COLA percentage varies each year.<\/p>\n

The COLA does not directly impact OASDI taxes<\/span>. Social Security law<\/a> sets the tax rate<\/span>. The SSA<\/span> also adjusts the taxable income limit separately from the COLA each year.<\/p>\n

How To Earn Social Security Credits<\/h2>\n

When you work and pay into the system, you earn up to four quarters of coverage, or\u00a0credits, per year. Credits are based on an employee\u2019s wages<\/span> or self-employment income during the year. Employers report their employees\u2019 earnings once a calendar year.<\/p>\n

You may work year-round to earn four credits or enough for all four credits in a shorter time. In 2026, a worker must earn\u00a0$1,890 to receive one credit<\/a>\u00a0and $7,560 to receive the maximum four credits for the year.<\/p>\n

You can check how many credits you have through the SSA<\/span>\u2019s website or your Social Security statement<\/a>.<\/p>\n

How Work Credits Affect OASDI Eligibility<\/span><\/h3>\n

You need enough Social Security credits to meet eligibility<\/span> requirements for Social Security benefits<\/span>. The number of credits you need for program eligibility<\/span> depends on the type of benefit as follows:<\/p>\n