If an employee is classified under the OASDI tax, what percentage of their salary is subject to taxation?

The appropriate percentage of an employee's salary subject to the Old-Age, Survivors, and Disability Insurance (OASDI) tax, commonly referred to as Social Security tax, is 6.2%. This tax rate applies to wages up to a specific wage base limit, which is adjusted annually. In this system, both employees and employers each contribute 6.2% of the employee's earnings towards Social Security, resulting in a combined contribution of 12.4%.

The reason this rate is designated specifically for the OASDI tax is due to the structure and funding mechanism of Social Security programs. OASDI is intended to provide financial support for retirees, disabled individuals, and survivors of deceased workers, and the 6.2% rate is a critical component in funding these benefits.

It’s essential to distinguish OASDI from other payroll taxes that have different rates or purposes. For example, Medicare tax is assessed at 1.45% of wages, and there are also additional taxes that can apply to higher earners, such as an additional Medicare tax. The 12.4% figure often quoted includes both employee and employer contributions, but for the employee alone, the applicable rate for OASDI will consistently be 6