Accounting Dictionary

OASDI

OASDI means Old Age Survivors and Disability Insurance. It is commonly called social security.

OASDI tax is 6.2% on every worker’s salary. The employer matches this amount for a total of 12.4%. There is a maximum amount of pay that is taxed. The maximum increases every year. This tax was passed as part of the New Deal in 1932. The original act specified that the tax be used to provide people aged 65 with a retirement pension. At the time, the average life span of the American worker was 58, so they weren’t planning on paying out much in pension money. As American life spans have increased, the tax has not kept pace with the growing monetary demands on the system.

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