The Social Security’s Old-Age, Survivors and Disability Insurance (OASDI) program limits the amount of earnings subject to taxation within a given year. This limit is updated each year with changes in the national average wage index. For earnings in 2013, the Social Security wage base is $113,700. The OASDI tax rate is set by statute at 6.2 percent for both employees and employers. However, in 2011 and 2012, federal legislation temporarily lowered the Social Security tax rate for an employee from 6.2% to 4.2%, but the employer continued to pay 6.2% of earnings. This lower employee Social Security tax rate is due to expire on December 31, 2012. Thus, assuming no extension of the temporary rate reduction, an individual with wages equal to or larger than $113,700 will contribute 6.2 percent or $7,049.40 to the OASDI program in 2013 and his or her employer will contribute the same amount.
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