What is the tax rate for OASDI?

What is the tax rate for OASDI?

• A. 6.75%
• B. 7.25%
• C. 7.65%
• D. 8.00%

Answer: (C)

The correct answer is indeed 7.65% for the OASDI, which stands for Old-Age, Survivors, and Disability Insurance. This is part of the Federal Insurance Contributions Act (FICA) tax, which funds Social Security and Medicare programs. The OASDI tax is comprised of two parts: the Social Security tax is 6.2% and the Medicare tax adds an additional 1.45%, bringing the total to 7.65%. This rate applies to wages up to a specified income limit, which can change annually. The ongoing importance of this rate lies in its direct contribution to Social Security benefits, including those for disability. Understanding this tax rate is crucial for both employees and employers, as it affects payroll calculations and also informs individuals about how their contributions benefit their potential future disability benefits.

The correct answer is indeed 7.65% for the OASDI, which stands for Old-Age, Survivors, and Disability Insurance. This is part of the Federal Insurance Contributions Act (FICA) tax, which funds Social Security and Medicare programs.

The OASDI tax is comprised of two parts: the Social Security tax is 6.2% and the Medicare tax adds an additional 1.45%, bringing the total to 7.65%. This rate applies to wages up to a specified income limit, which can change annually. The ongoing importance of this rate lies in its direct contribution to Social Security benefits, including those for disability.

Understanding this tax rate is crucial for both employees and employers, as it affects payroll calculations and also informs individuals about how their contributions benefit their potential future disability benefits.