What Is Fed OASDI EE Tax on My Paycheck?

You probably noticed an income tax deduction on your paycheck called Fed OASDI EE or maybe Federal OASDI. What is this tax and what does OASDI stand for? Let’s find out.

What Is Fed OASDI EE?

Fed OASDI EE stands for the Federal Old Age, Survivors, and Disability Insurance Employee Expense. Because that’s such a mouthful, let’s break it down.

  • Fed is short for Federal. That one is easy.
  • OASDI stands for Old Age, Survivors, and Disability Insurance. You probably know this better as Social Security.
  • EE stands for Employee Expense. You are the employee in this case.

Every worker in the United States must pay this Social Security tax to the federal government and therefore has this OASDI deduction on their paycheck.

As a reminder, Social Security in the U.S. provides benefits to retirees, disabled workers, and survivors of deceased workers. Social Security benefits include retirement and disability income, Medicare and Medicaid, and death and survivor benefits.

This OASDI tax is essentially your contribution to Social Security. Your employer pays an equal amount of the OASDI tax. The self-employed must pay both the employee and employer expense.

OASDI Tax Rate

As of 2019, the OASDI tax rate is 6.2% and has been that rate since 2011.

As a result, every employee in the U.S. must pay the 6.2% OASDI tax per paycheck and all employers must pay the 6.2% OASDI tax per employee, per paycheck. The self-employed must pay a total 12.4% OASDI tax.

In 2019, for every taxable dollar earned up to $132,900, an employee must pay this OASDI Social Security tax. Hence, at most, an employee will pay $8,239.80 per year in OASDI tax.

In 2011, the OASDI tax rate was increased 0.9% from 5.3% for employees, and it seems like the maximum taxable earnings increases every year. Consequently, check out the OASDI tax rate and limit page on the Social Security Administration’s website for the latest information.

Craving more finance knowledge? Check out some of my other finance blog posts here.

Also, if you have any additional questions about this income tax on your paycheck, let me know below.

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