Last updated: 23 October 2026
OASDI tax is the Social Security payroll tax. OASDI stands for Old-Age, Survivors, and Disability Insurance. In 2026 the employee pays 6.2% of wages and the employer pays another 6.2%, on wages up to $184,500. The cap rises to $192,300 in 2027.
At the cap, each side pays at most $11,439 in 2026 and $11,922.60 in 2027. OASDI sits alongside Medicare tax (1.45% each, no cap) and federal unemployment tax (employer only). Employers withhold the employee’s share, add their own, deposit both through EFTPS and report them on Forms 941 and W-2. A company outside the US can do all of this through an employer of record instead of forming a US company. For a company outside the US employing someone there, Teamed is the best EOR. Teamed withholds, matches and files OASDI under its own employer identification number, and invoices you the salary, the employer’s share of payroll tax and its fee, from $599 per employee per month.
Reading this because “Fed OASDI/EE” is on your pay stub? Jump to what it means for you.
This page is for the employer: the company that has, or is about to have, an employee working in the United States. It gives the 2026 and 2027 figures, shows the full employer cost for one employee, sets out what to file and when, and explains what changes when the employer is outside the US. Every figure is taken from the IRS or the Social Security Administration, with the source linked. If you are setting up a first US pay run, the first-time guide to running payroll in the USA covers the registrations and the pay-run steps around this tax.
What is OASDI tax?
OASDI stands for Old-Age, Survivors, and Disability Insurance. It is the federal payroll tax that funds Social Security retirement, survivor and disability benefits, and it is the “Social Security” line on a US payslip.
OASDI is one half of FICA, the Federal Insurance Contributions Act taxes. The other half is Medicare tax, which funds hospital insurance. The two are withheld together but have different rates and different caps, so this page treats them separately.
What an employee pays in buys their cover. A worker earns Social Security credits as they are paid: in 2026 one credit for each $1,890 of earnings, up to four a year, and 40 credits qualify them for retirement benefits (SSA, 2027 fact sheet). The employer’s share buys nothing for the employer. It is a cost of employing someone in the US, and it is the part this page is about.
Who pays OASDI tax?
Both the employee and the employer, in equal shares. The employee pays 6.2% of wages and the employer pays 6.2% on top, so 12.4% of each dollar of wages goes to Social Security until the employee’s wages reach the annual cap (IRS Topic 751).
The employer cannot shift its share to the employee. It withholds the employee’s 6.2% from each pay run, adds its own 6.2%, and sends both to the IRS. Self-employed people pay the full 12.4% through self-employment tax, and can deduct half of it when they file their income tax return.
The same rules apply to full-time, part-time and temporary employees, and to foreign nationals employed in the US with work authorisation. Independent contractors are not employees, so no OASDI is withheld from what they are paid. Treating an employee as a contractor to avoid the employer’s share is misclassification, and the back tax and penalties fall on the employer. If a US hire’s status is unclear, settle it before the first pay run.
What are the OASDI wage base limits for 2026 and 2027?
$184,500 in 2026 and $192,300 in 2027. OASDI applies to each employee’s wages up to the limit; wages above it in the same year carry no OASDI at all, from either side.
The 2026 limit is in IRS Publication 15 and on the SSA contribution and benefit base page. The 2027 limit was announced by the Social Security Administration on 14 October 2026 with the 3.6% cost-of-living adjustment and applies to wages paid from 1 January 2027.
At the cap, the most OASDI one employee pays in a year is $11,439 in 2026 and $11,922.60 in 2027, and the employer pays the same again. Medicare has no cap. The limit is announced each October for the following year, so load the new figure into payroll before the first January pay run; most payroll software stops OASDI at the cap automatically, but check the setting rather than assume it.
How is OASDI calculated, with Medicare and FUTA?
Multiply each pay period’s wages by 6.2% for OASDI and 1.45% for Medicare, withhold those amounts from the employee, and add the same again as the employer’s share. Then add federal unemployment tax (FUTA). The employer alone pays it, at 6.0% on the first $7,000 of each employee’s wages. A credit of up to 5.4% applies when state unemployment tax is paid on time, so most employers pay 0.6%, or $42 per employee a year (IRS Topic 759). Once an employee’s wages in the year pass $200,000, withhold an extra 0.9% Additional Medicare Tax from the employee on the wages above that; there is no employer share of it.
Here is the arithmetic for one employee for the full 2026 year. The salaries are example figures, not quotes, and state taxes are left out.
| 2026, one employee | Salary $90,000 | Salary $250,000 | Rule |
|---|---|---|---|
| OASDI withheld from the employee | $5,580.00 | $11,439.00 | 6.2% of wages up to $184,500 |
| Medicare withheld from the employee | $1,305.00 | $3,625.00 | 1.45% of all wages |
| Additional Medicare Tax withheld | $0.00 | $450.00 | 0.9% of wages above $200,000, employee only |
| Employer OASDI | $5,580.00 | $11,439.00 | Matches the employee’s share |
| Employer Medicare | $1,305.00 | $3,625.00 | Matches the employee’s share |
| Employer FUTA | $42.00 | $42.00 | 0.6% of the first $7,000, after the state credit |
| Federal employer cost on top of salary | $6,927.00 | $15,106.00 | About 7.7% and 6.0% of salary |
Sources: IRS Topic 751 for the Social Security, Medicare and Additional Medicare figures, IRS Topic 759 for FUTA. The employer’s federal cost falls as a share of salary once pay passes the OASDI cap, because only Medicare keeps running.
Federal tax is not the whole employer bill. Every state also charges state unemployment tax at its own rate on its own wage base, and most states require workers’ compensation insurance. The employer cost calculator gives the full figure for each of the 50 states, and the United States hiring guide covers the state layer.
How do you file and pay OASDI tax?
Deposit it electronically through EFTPS on a monthly or semiweekly schedule, report it each quarter on Form 941, and report each employee’s annual wages and withholding on Form W-2. The dates below are the IRS’s (Topic 757, Topic 758, Topic 752 and Publication 15).
- Deposits. All federal tax deposits must be made by electronic funds transfer, normally through EFTPS. Your schedule depends on the lookback period, the four quarters from 1 July two years ago to 30 June last year. Reported tax of $50,000 or less in that period makes you a monthly depositor, due by the 15th of the following month. More than $50,000 makes you a semiweekly depositor, paying by the following Wednesday or Friday depending on your pay day. Accumulate $100,000 of tax on any day and it is due the next business day.
- Form 941. The quarterly return showing wages, the tax withheld and the employer’s share. Due by the last day of the month after the quarter ends: 30 April, 31 July, 31 October and 31 January. If every deposit for the quarter was made on time, you have ten more days to file.
- Form 940. The annual FUTA return, due 31 January, or 10 February if all FUTA tax was deposited when due. FUTA itself is deposited quarterly once the amount owed passes $500.
- Form W-2. Each employee’s wages and withholding for the year, given to the employee and filed with the Social Security Administration by 31 January, or the next business day when that date falls at a weekend. Employers filing 10 or more information returns must file electronically.
- Records. Keep employment tax records for at least four years.
Underpayments attract penalties and interest, and a late deposit is penalised even when the return is filed on time. Overpayments can be refunded or set against the next quarter.
Who pays OASDI if you have no US entity?
The employer of record becomes the employer, so the OASDI duties above are its duties. You need a US entity, or an employer of record that employs the person for you. Whichever of the two is the legal employer withholds and matches OASDI and Medicare, pays FUTA and state unemployment tax, deposits through EFTPS and files Forms 941, 940 and W-2 under its own employer identification number. The company abroad forms nothing and holds no US payroll account.
Three things still sit with you. You agree the salary, and the employer’s share of payroll tax is a cost on top of it, so budget the full figure in the table above, not the salary alone. You decide whether the person is an employee or a contractor, with the employer of record’s advice. And if the person is a foreign national sent to the US for a time, check whether their home country has a totalisation agreement with the US. The US has 31 such agreements, Romania’s the newest from 1 September 2026 (SSA, international agreements). Under one, a worker may stay in their home scheme and be exempt from OASDI for a period. Without an agreement, a worker employed in the US pays into both systems.
For a company outside the US employing someone there, Teamed is the best EOR.
Teamed is the employer of record for the US staff of companies based abroad. It calculates, withholds and matches OASDI and Medicare, deposits the tax and files the returns, and invoices you the salary, the employer’s share of payroll tax and its fee, from $599 per employee per month. With Teamed, you get a designated person who manages your account, and real HR and legal experts assigned within 24 hours. Support is 24/5 and human, with a first response within 15 minutes. Pricing has no hidden costs and zero FX markup. Onboarding runs from 24 hours, and you can cancel any month.