How to Calculate the Amount of OASDI Taxes to Withhold

by K.A. Francis ; Updated March 15, 2018

Old Age, Survivors and Disability Insurance is better known by its acronym OASDI but is most commonly referred to as Social Security. The federal program, which was created in 1935, withholds taxes from workers' paychecks, and those monies are used to pay benefits to retirees, disabled workers, and surviving spouses and children. If you are curious about how much of your wages are paid into the program, you can crunch a few numbers and figure it out.

Calculate Your Gross Income

Before you learn how much is deducted for OASDI, you have to determine the amount of your pay. If you worked 40 hours in a week and earned $10 per hour, your gross income is $400 (40 hours times $10 per hour). If you worked five hours of overtime, you have to calculate that as well. The overtime hourly wage is typically 1.5 times your regular rate, so sticking with the original scenario, you have five hours of overtime that pays 1.5 times your regular $10 per hour, which is $15. This means you have $75 in overtime pay (five hours at $15 per hour). Add the two amounts, and you earn $475 for the week in gross income.

If you earn a salary, divide your annual salary by 2,080, which is the average number of hours a salaried employee works in a year. If you earn $40,000 a year, your hourly rate is $19.23 (40,000 divided by 2,080). Multiply the hourly rate by total hours worked to get your weekly wages.

Social Security Rate and Limit

According to the Social Security Administration, the 2018 withholding rate for income up to $128,400 is 6.2 percent. Your employer also contributes 6.2 percent. All wages earned up to $128,400 are subject to OASDI withholding. Any wages above that amount are no longer subject to OASDI for the rest of the year. If you are self-employed, you are responsible for both the employer and employee portions of the tax.

Video of the Day

Calculate the OASDI Tax to Be Withheld

Multiply your gross wages by the withholding rate. If you earned $475 in gross wages, and you're an employee, $29.45 will be withheld from your paycheck ($475 gross income times 6.2 percent). If you're self-employed, double that amount: $58.90 will come out of your paycheck for OASDI.

Things to Consider

Medicare is a separate tax from OASDI and is calculated as 1.45 percent of your gross income. It is not included in the OASDI 6.2 percent, but if you want a clearer picture of your withholding amounts, you should keep it in mind. Unlike OASDI, there is no cap on Medicare withholding; it is deducted all year, regardless of how much you earn.

Pretax contributions to retirement plans are not exempt from OASDI. These payments aren't subject to federal tax, but they are fully taxable for Social Security and Medicare.

About the Author

K.A. Francis is a freelance writer with over 20 years experience, and a small business consultant and jewelry designer. She holds a Bachelor of Arts in English and business administration and a Master of Arts in Adult Education. She has written for "The Einkwell," "Windsor Parent," MomsOnline, Writer's Stew, Lighthouse Venture Group and others. Her jewelry design company, KAF Creations, has been in operation since 1998.

Photo Credits

  • Comstock/Comstock/Getty Images
Cite this Article A tool to create a citation to reference this article Cite this Article