Social Security (FED OASDI) Tax Impacting Your Paycheck





Have you checked your paycheck stub in 2013 yet?  If you have, then you already noticed that FED OASDI/EE, which stands for Old-Age, Survivors, and Disability Insurance/Employee’s Earning, under your tax deduction section went up significantly.  The reason being is that employee’s portion of Social Security increased from 4.2% in 2012 to 6.2% in 2013.  At first, I thought, “Oh, it’s just 2% increase”.  However, I quickly realized that this 2% increase is actually 47.2% increase compared to 2012.  For example, if you were paying $80 in FED OASDI/EE in 2012 every week, in 2013 you are paying $118 ($38 more every week)!

USM Related Post: Social Security Tax FED OASDI Increases in 2014





The maximum taxable income increased as well.  In 2012, the maximum taxable income was $110,100.  In 2013, this maximum taxable income increased by $3,600 to $113,700!  This means that an individual who paid maximum of $4642.20 in 2012 will be paying maximum of $7,049.40, an increase of $2407.20!  Sigh…  However, As long as your annual income is less than $113,700, your contribution to FED OASDI/EE will not reach $7,049.40.

USM Related Post: Understanding Tax Withholdings on Your Paycheck

By the way, don’t expect that your Social Security benefit will increase by paying this extra 2% in 2013.  There is absolutely no change in the benefit.

Comments
  • Eddie L. Sapp April 24, 2015 at 2:54 pm

    If a person retires, what Federal taxes stop being withheld from the retirement/paycheck?

    • UltimateSmartMoney May 31, 2015 at 5:49 pm

      No, you always pay Federal and State taxes even after you retire and if you still end up working. Even your Social Security income will be taxed along with any investment gains from your brokerage account. This is why it is so important to take advantage of ROTH IRA or other investment options.

  • Jonathon Henley July 14, 2016 at 5:47 pm

    If benefits are not increasing how can they justify these increases? Where is the money going?

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