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How to Calculate OASDI taxes


The Old-Age, Survivors and Disability Insurance -- OASDI -- tax is more commonly known as the Social Security tax. This tax applies only to earned income, so your wages or salary is subject to the tax, but the interest you earn on your savings account is not. As of 2015, only $118,5000 of earned income is subject to the tax, but this limit adjusts for inflation. (See Table Below)

Social Security Wage Limit for 2016 to Remain at $118,500

On Oct. 15, 2015, the Social Security Administration announced that there will be no increase in monthly Social Security benefit payments in 2016, and that the amount of wages subject to Social Security taxes will also remain unchanged at $118,500 (Maximum Social Security tax withheld from wages is $7,347.00 in 2016).

Additional Medicare Tax

A 0.9% additional Medicare tax must be withheld from an individual’s wages paid in excess of $200,000 in a calendar year. There is no employer match for the additional Medicare tax.

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For the Self-Employed.

When you are self-employed, you must pay quarterly estimated taxes to the Internal Revenue Service. "Estimated taxes" is another phrase for "provisional taxes." You will see both terms in discusions of business taxes. You must file Form 1040 ES every April 15, June 15, Sept. 15 and Jan. 15. You can incur fines if you do not pay enough estimated tax, so you should learn how to calculate your estimated taxes accurately.

2016Social Security (OASDI) Program Rates & Limits
Tax Rates (percent)
Social Security (Old-Age, Survivors, and Disability Insurance) 6.20
Medicare (Hospital Insurance) Employers and Employees, each a,b 1.45
Maximum Taxable Earnings (dollars)
Social Security 118,500.
Medicare No limit
Additional Medicare tax must be withheld from an individual's wages paid in excess of $200,000 in a calendar year. No employer match for the additional Medicare tax. 0.9%
Earnings Required for Work Credits (dollars)
One Work Credit (One Quarater of Coverage) 1220.
Maximum of Fours Credits per Year 4880.
Earnings Test Annual Exempt Amount (dollars)
Under Full Retirement Age for Entire Year 15,720.
8/245/2014For Months Before Reaching Full Retirement Age in Given Year 41,880.
Beginning with Month Reaching Full Retirement No limit
Maximum Monthly Social Security Benefit for Workers Retiring at Full Retirement Age (dollars) 2,663.
Ful Retirement Age 66
Cost-of-Living Adjustment (percent) 1.7
  • a. Self-employed persons pay a total of 15.3 percent—12.4 percent for OASDI and 2.9 percent for Medicare.
  • b. This rate does not reflect the additional 0.9 percent in Medicare taxes certain high-income taxpayers are required to pay. See IRS information on this topic.
  • 2016 Social Security (OASDI) Program Rates & Limits Tax Rates (percent)
    Tax Rates (percent)
    Social Security (Old-Age, Survivors, and Disability Insurance) 6.20
    Medicare (Hospital Insurance) Employers and Employees, each a,b 1.45
    Maximum Taxable Earnings (dollars)
    Social Security 118,500.
    Medicare (Hospital Insurance) No limit
    Earnings Required for Work Credits (dollars)
    One Work Credit (One Quarater of Coverage) 1260.
    Maximum of Fours Credits per Year 5040.
    Earnings Test Annual Exempt Amount (dollars)
    Under Full Retirement Age for Entire Year 15,720.
    8/245/2014For Months Before Reaching Full Retirement Age in Given Year 41,880.
    Beginning with Month Reaching Full Retirement No limit
    Maximum Monthly Social Security Benefit for Workers Retiring at Full Retirement Age (dollars) 2,639.
    Ful Retirement Age 66
    Cost-of-Living Adjustment (percent) 0.00
  • a. Self-employed persons pay a total of 15.3 percent—12.4 percent for OASDI and 2.9 percent for Medicare.
  • b. This rate does not reflect the additional 0.9 percent in Medicare taxes certain high-income taxpayers are required to pay. See IRS information on this topic.
  • Please note: Our explanation that are provided on our web site for "How to Calculate Futa and Suta taxes" are only meant to provide general guidance and estimates about the payroll process. They should not be relied upon to calculate exact taxes, payroll or other financial data. You should consult with a professional advisor or accountant regarding your specific payroll concerns.


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