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Are OASDI and Social Security taxes the same? Paycheck federal tax explained

You work hard for what you earn, but a portion of that income must be paid to federal and state taxes as well to Social Security, but what is OASDI?

OASDI, Social Security and your paycheck

If you’ve ever taken the time to take a look at your paycheck, you’ll see that your take-home pay is reduced by a fair amount from what you actually earn. Depending on your job there are a number of deductions listed that could be for healthcare coverage or retirement plans through your employer, for example.

But all paystubs will list taxes both federal and state at a minimum, as well as Medicare and Social Security. Sometimes these are grouped together under the label FICA (Federal Insurance Contributions Act). Other times they are separate but instead of Social Security you may see OASDI or OASDI/EE.

Are OASDI and Social Security taxes the same?

OASDI stands for ‘Old-Age, Survivors, and Disability Insurance’ which is managed by the Social Security Administration (SSA) and it is one and the same as Social Security. The ‘EE’ for its part stands for ‘Employee Expense’, which may be placed after your Medicare or FICA as well.

This is because both the employer and employee contribute to the Social Security and Medicare funds. Currently, each pays into the programs 6.2 percent and 1.45 percent, to each program respectively, for a total of 7.65 percent of your earnings up to a limit. In 2023, the taxable amount increased from $147,000 the year before to $160,200. So even if you earn more than the maximum taxable amount you will only have at most $12,335.40 ($9,932.40 for OASDI and $2,403 for Medicare) subtracted from your tax deductible earnings this year.

Those who are self-employed pay both portions, 12.4 percent for OASDI and 2.9 percent for Medicare, for a total of 15.3 percent. The maximum taxable cap is the same for all workers, so if you work for yourself you’ll pay at most $24,670.80 in 2023, $19,864.80 for OASDI and $4,806 for Medicare. Fortunately for the self-employed, they can deduct half of what they pay into the Social Security and Medicare programs from their income taxes.

What do Social Security’s OASDI taxes pay for?

As the name suggests, ‘Old-Age, Survivors, and Disability Insurance’, the money paid into these programs which goes toward three types of beneficiaries. The majority of the money that the SSA pays out goes to retirees, who can begin to claim benefits when they turn 62 but should take into account that early retirement could knock 30 percent off monthly payments.

Disability benefits (SSDI) provide payments for those who are unable to work, or whose capacity to work is limited, due to a disability. Beneficiaries can be the worker who has contributed a sufficient amount to the program or family members of a contributor.

Survivor benefits may be paid to certain eligible family members of a contributor who is deceased. The amount depends on the age of the family member and whether or not they have a disability.