How the Social Security Tax Works
The Social Security tax, also known as the “Old-Age, Survivors, and Disability Insurance (OASDI) tax,” funds the Social Security program in the United States. As of September 2021, more than 65 million people were receiving Social Security payments of around $1,439 per month.3 According to the SSA, approximately 70 million Americans will receive a slightly larger amount of $1,657 due to the cost-of-living adjustment in 2022.
The tax has two parts. The first is the payroll tax mandated by the Federal Insurance Contributions Act (FICA) and the self-employment tax mandated by the Self-Employment Contributions Act (SECA).6 Medicare tax, or “hospital insurance tax,” makes up the second part.
