OASDI stands for Old-Age, Survivors, and Disability Insurance, the formal name for the federal program most people call Social Security. It pays monthly benefits to retired workers, to the families of workers who have died, and to workers with qualifying long-term disabilities. The 6.2 percent line item on your pay stub labeled OASDI (or bundled into FICA) is the tax that funds it. As of 2026, the program covers roughly 75 million beneficiaries.
What OASDI Pays For
The name spells out the three benefits. Each one is funded by the same payroll tax, but the eligibility rules and payment amounts differ.
Retirement Benefits
This is the piece most people think of first. Once you have worked long enough and reached at least age 62, you can begin collecting a monthly check based on your career earnings. The amount depends on how much you earned, how many years you worked, and the age you start. For 2026, the maximum monthly retirement benefit for someone claiming at full retirement age is $4,152.1Social Security Administration. What Is the Maximum Social Security Retirement Benefit Payable
Survivors Benefits
When a covered worker dies, certain family members can collect benefits calculated from that worker’s earnings record. Eligible survivors include a surviving spouse, a divorced spouse if the marriage lasted at least ten years, dependent children, and in some cases a dependent parent age 62 or older.2Social Security Administration. Survivor Benefits A higher lifetime earner generally means larger survivor checks. In effect, the program builds a form of life insurance into the payroll tax.
Disability Benefits
Disability benefits go to workers whose medical condition is severe enough that they cannot perform substantial work, and the condition is expected to last at least twelve consecutive months or result in death.3Social Security Administration. How Does Someone Become Eligible That standard is strict. Unlike private short-term disability policies, OASDI does not pay for partial or temporary disabilities.4Social Security Administration. Disability Benefits Approval requires detailed medical documentation and can take months.
How the OASDI Tax Works
OASDI is funded through payroll taxes required by the Federal Insurance Contributions Act.5Social Security Administration. What Is FICA Employees pay 6.2 percent of gross wages and employers match that with another 6.2 percent, for a combined rate of 12.4 percent.6Internal Revenue Service. Topic No 751, Social Security and Medicare Withholding Rates This is separate from the 1.45 percent each side pays for Medicare. When you see “OASDI” on your pay stub, that 6.2 percent deduction is your share.
Self-employed workers pay both halves, a combined 12.4 percent, under the Self-Employment Contributions Act.7Office of the Law Revision Counsel. 26 USC 1401 – Rate of Tax They can deduct the employer-equivalent half when calculating adjusted gross income, which softens the hit somewhat.8Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes)
If you employ a nanny, housekeeper, or other household worker and pay $3,000 or more in cash wages during 2026, you are required to withhold and pay OASDI taxes on those wages.9Internal Revenue Service. Publication 926 (2026), Household Employers Tax Guide
The Wage Base Cap
OASDI tax stops once your year-to-date wages hit an annual ceiling. For 2026, the cap is $184,500.10Social Security Administration. Contribution and Benefit Base Above that amount, no more OASDI tax is owed for the rest of the calendar year by either you or your employer. At the 6.2 percent rate, the maximum an employee will pay in 2026 is $11,439. The Social Security Administration adjusts the cap each year based on the national average wage index.11Social Security Administration. Contribution and Benefit Base Determination The Medicare portion of FICA has no ceiling and applies to every dollar of wages. Earnings above the OASDI cap are not taxed, and they also do not count toward your future benefit.
Who Qualifies: Work Credits
Before you can collect any OASDI benefit, you need enough work history in the system. The SSA measures that history in “credits.” In 2026, you earn one credit for every $1,890 in covered wages or self-employment income, up to four credits per year. Earning $7,560 in 2026 gets you the full four credits regardless of how much more you make.12Social Security Administration. Social Security Credits and Benefit Eligibility
Retirement benefits require 40 credits, roughly ten years of work.13Social Security Administration. How You Earn Credits Disability and survivor benefits use a sliding scale that requires fewer credits for younger workers. Credits do not expire, so gaps in employment do not erase what you have already earned.
How Benefits Are Calculated
Your retirement benefit is a personalized figure built from your actual earnings history. The SSA takes your highest 35 years of indexed earnings, averages them monthly to get your Average Indexed Monthly Earnings (AIME), and runs the AIME through a formula to produce your Primary Insurance Amount, the benefit you would get at full retirement age.14Social Security Administration. Social Security Benefit Amounts If you worked fewer than 35 years, zeros fill the empty years and pull the average down.
The formula is deliberately progressive. Lower earners replace a larger share of their pre-retirement income than higher earners do. Someone with modest lifetime wages might see Social Security replace over 50 percent of their working income, while a high earner near the wage-base cap might replace closer to 25 percent.
When You Can Claim
The earliest retirement filing age is 62, but claiming that early permanently reduces your monthly check. For anyone born in 1960 or later, full retirement age is 67.15Social Security Administration. Benefits Planner: Retirement Filing at 62 cuts the benefit by 30 percent for life, so a $1,000 benefit at 67 becomes $700 at 62.16Social Security Administration. Retirement Age and Benefit Reduction
Waiting past full retirement age works the other way. Each year you delay between 67 and 70 adds 8 percent through delayed retirement credits.17Social Security Administration. Benefits Planner: Retirement – Delayed Retirement Credits The increase stops at 70, so there is no financial reason to wait longer. A $2,000 benefit at 67 grows to roughly $2,480 by age 70.
A spouse who never worked, or whose own record would produce a small benefit, can collect up to 50 percent of the higher-earning spouse’s benefit at full retirement age.18Social Security Administration. Benefits for Spouses Claiming that spousal benefit early reduces the amount, potentially to as little as 32.5 percent of the worker’s benefit at age 62.
Cost-of-Living Increases
Once benefits start, they are adjusted annually to keep pace with inflation. These cost-of-living adjustments (COLAs) are based on the Consumer Price Index. For 2026, benefits rose by 2.8 percent.19Social Security Administration. Cost-of-Living Adjustment (COLA) Information COLAs apply automatically to retirement, disability, and survivor benefits. In flat inflation years the adjustment can be zero, but benefits never drop from one year to the next.
Are OASDI Benefits Taxed?
A portion of your Social Security benefits may be subject to federal income tax, depending on your total income. The IRS uses “combined income,” which is your adjusted gross income plus any nontaxable interest plus half of your Social Security benefits. The thresholds have not been adjusted for inflation since they were set in the 1980s and 1990s, so they catch more filers each year:
- Single filers: combined income between $25,000 and $34,000 means up to 50 percent of benefits are taxable; above $34,000, up to 85 percent becomes taxable.
- Married filing jointly: combined income between $32,000 and $44,000 means up to 50 percent of benefits are taxable; above $44,000, up to 85 percent becomes taxable.
No more than 85 percent of benefits can ever be taxed federally. Most states do not tax Social Security benefits, and among the eight states that do as of 2026, most offer exemptions or deductions for lower-income retirees.
Where Your OASDI Tax Money Goes
All OASDI payroll taxes flow into two federal trust funds held at the Treasury: the Old-Age and Survivors Insurance Trust Fund and the Disability Insurance Trust Fund.20Social Security Administration. 2025 OASDI Trustees Report By law, the money can only be used to pay benefits and cover administrative costs. Surplus revenue is invested in special-issue Treasury securities that earn interest.
The program’s long-term finances are under pressure. The 2025 Trustees Report projects that the combined OASDI trust funds can pay full benefits until 2034. If Congress takes no action, incoming payroll tax revenue after that point would still cover a substantial majority of scheduled benefits, but not the full amount.21Social Security Administration. The 2025 Annual Report of the Board of Trustees The 2034 figure marks the point when reserves run out, not the point when benefits stop.