Oasdi Tax Meaning: Complete Breakdown And Comparison To Casdi

On your pay stub, you might see a section for OASDI or CASDI if you live in California. This set of acronyms signifies vital payroll taxes used to support social programs.

Knowing these deductions helps you understand your paycheck. It’s also good to learn the reasons behind having them.

In this article, we’ll help you understand the OASDI tax meaning and the CASDI tax meaning. So, you’ll know what impact these taxes have on your earnings. You’ll also learn who is responsible for them and the things they help with.

What Is the OASDI Tax Meaning?

OASDI tax provides funds for the administration of Social Security. Its full name indicates Old Age, Survivors and Disability Insurance. It covers retirement income, benefits for survivors and disability coverage. Owing to these taxes, two of America’s primary social insurance programs are funded.

OASDI/EE may be written among the deductions whenever you check your pay stub. EE refers to employee expense. This represents the money you pay for your Social Security tax.

How the OASDI Tax Works

Basically, people pay a part of their earnings during their working lives. This is to help support benefits for today’s beneficiaries. Then, others will get the same when it is their turn to retire or get disabled.

Close to 85% of the money OASDI tax collects is used to finance monthly retirement checks. That's for those who have retired and their families. Part also goes to spouses and children of deceased workers. Roughly several cents of your income taxes go to a trust used to support people who have disabilities. From every dollar, just a tiny amount is needed for administration.

You should realize that whatever you contribute will not be placed in a personal account under your name. The money is used to cover the expenses of those who are already benefiting from it. The pay-as-you-go system works by making sure today’s workers cover the cost of paying benefits to today’s retirees.

Who Pays the OASDI Tax?

Most individuals who gain income in the United States pay the OASDI tax. This involves employees with standard wages. It also includes people who are self-employed. Same with people who work part-time and those who have retired and still work.

Both the worker and the employer are required to assist with the tax burden. Individuals who are self-employed must pay for both taxes. But then, they have the opportunity to deduct part of it when completing their tax forms.

OASDI Tax Rates and Limits for 2025

The tax rate for both employees and self-employed people in OASDI is different. It's 6.2% and 12.4%, respectively, and will not change in 2025.

Nonetheless, only earnings up to the taxable maximum or wage base limit are subject to this tax. As of 2025, the limit is $176,100. This is $7,500 higher than the limit in 2024, which was $168,600. This is due to adjustments in inflation and the cost of living.

You do not need to pay OASDI tax on earnings above the threshold. Therefore, people working for others will need to pay a maximum of $10,918.20 in OASDI tax in 2025. The same rate is for self-employed people, which is $21,836.40.

In contrast to the Medicare part of FICA taxes, the OASDI tax has a limit on how much earnings are taxed.

What Is CASDI Tax Meaning?

On the federal level, people are covered by OASDI. CASDI helps residents of California with the same issue. California has programs that are funded by the CASDI tax. These are the short-term disability insurance program and the Paid Family Leave program.

California workers may not be able to work because of sickness. They may receive temporary pay through CASDI. It also allows workers to take time off to look after a sick relative. They can also enjoy time with their new child.

OASDI is a combination of employee and employer money. CASDI receives contributions from the workers alone. If you see CASDI or CA-SDI on your paycheck, this is the California State Disability Insurance.

How CASDI Differs From OASDI

CASDI and OASDI are different mainly due to their coverage, management and benefits.

CASDI is a California program, whereas OASDI covers people working across the country. When someone is temporarily on leave from work or has a short-term disability, CASDI covers them up to 52 weeks. OASDI cares for disabled, retired or deceased workers when planning for the long term.

They are also different in terms of how their funding sources are managed. All contributions to CASDI are made by employees. There is no match from the employer. In comparison, employers and employees most often share the costs of funding OASDI. Only employees do this for self-employed individuals.

It is also easier to use CASDI. You only require eight days of disability to claim it. Whereas, the OASDI requires a more serious disability that is expected to last up to one year.

CASDI Tax Rates and Benefits

The rate for CASDI in 2025 is 1.1% of wages, up to $153,164. Each employee can put no more than $1,684.80 into their 401(k) account in a year. The rate may shift every year, so make sure you’re aware of the up-to-date ones.

About 60-70% of an employee’s gross income is provided by CASDI. That's why that person is on disability or family leave. The proportion they receive is based on their income. Low-earners are normally entitled to a higher rate of pay.

Every year, the maximum amount of weekly benefits can be different. Anyone qualified can receive up to $1,540 every week. The maximum benefit you can receive in one year is $80,08

Eligibility for CASDI Benefits

Only those who meet certain requirements can use CASDI benefits in California.

For at least eight days in a row, they should be unable to do their usual work. It should be because of an illness, injury or pregnancy. They are eligible if they have missed income due to their condition. That's if they were employed or trying to find a job when they got sick or injured.

Besides that, they must have gotten at least $300 in wages that are subject to CASDI with a deduction. It had to be within the five to eighteen months before they became disabled. There's another requirement for the first eight days after the injury and throughout their entire benefit period. They should be seen and treated by a licensed doctor or an accredited religious practitioner.

Are There Any Exemptions?

While the majority of workers are required to pay OASDI taxes, some special exemptions exist.

Someone may place great importance on not using insurance and wish to avoid benefits. They can request an exemption with Form 4029 from the IRS. This also means losing your right to government support.

The type of visa someone has may determine if they are allowed to be exempt from the tax. Part of this is represented by international students, researchers, academics, and government workers who are present in the U.S.

Anyone who makes less than $400 per year is not required to pay OASDI taxes.

To get an exemption, an employer can offer a plan that is as good as CASDI. It should cost the employees the same and get the approval of more than 50% of the workforce.

Wrap Up

Knowing the OASDI tax meaning and the CASDI tax meaning is important. You should know why these taxes are noted on your payslip. Look into the role OASDI and CASDI taxes play in protecting your income. You may not agree with the idea of these taxes reducing your pay. But then, the money goes to support vital insurance programs. These programs can aid you or your loved ones in retirement, upon disability or when similar issues arise.

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