OASDI tax stands for Old Age, Survivors, and Disability Insurance tax, which is a tax on earned income that is used to fund Social Security and Medicare programs in the United States.
The OASDI tax is a payroll tax that is paid by both employees and employers, and it is based on a percentage of an employee's gross income. As of 2021, the OASDI tax rate is 6.2% for employees and 6.2% for employers, for a total rate of 12.4%.
The OASDI tax applies to earned income up to a certain amount, known as the Social Security wage base. As of 2021, the Social Security wage base is $142,800, which means that any income earned above this amount is not subject to the OASDI tax.
The funds collected through the OASDI tax are used to provide benefits to retirees, their surviving spouses and children, and people with disabilities, as well as to fund the Medicare program that provides healthcare benefits to people over the age of 65 and those with certain disabilities.
Is OASDI tax mandatory?
Yes, OASDI tax is mandatory for most employees and employers in the United States. The tax is collected to fund Social Security and Medicare programs that provide benefits to retirees, their surviving spouses and children, and people with disabilities.
Both employees and employers are required to pay OASDI tax, which is a payroll tax based on a percentage of an employee's gross income. The tax is automatically deducted from an employee's paycheck and remitted to the government by the employer.
The amount of OASDI tax paid by employees and employers is set by law and is subject to change periodically. As of 2021, the OASDI tax rate is 6.2% for employees and 6.2% for employers, for a total rate of 12.4%.
There are some exceptions to the OASDI tax requirement, such as for certain religious groups and for some employees who are covered by a retirement plan established by their employer. However, in general, most employees and employers in the United States are required to pay OASDI tax.