(UNITED STATES) International students working in the United States 🇺🇸 under the Optional Practical Training (OPT) program could soon face a major new tax burden. Congress is considering the DIGNITY Act of 2025, which would end the FICA tax exemption that OPT students and their employers currently enjoy. If passed, this change would mean both students and employers must pay Social Security and Medicare taxes on OPT earnings for the first time.
The DIGNITY Act, introduced in July 2025, is now under review in both the House and Senate. The bill’s Section 3302 specifically targets all international students on OPT, regardless of how long they have been in the United States 🇺🇸. As of August 6, 2025, the FICA tax exemption for OPT students remains in place, but the future of this benefit is uncertain.
What Is OPT and How Does the FICA Tax Exemption Work?
OPT is a program that lets international students on F-1 visas work or intern in the United States 🇺🇸 for up to 12 months after graduation. Students in science, technology, engineering, or math (STEM) fields can extend this period to 36 months. Under current tax rules, OPT students are usually considered “nonresident aliens” for tax purposes. This means they do not have to pay FICA taxes, which include 6.2% for Social Security and 1.45% for Medicare, for up to five calendar years.
This FICA tax exemption also applies to employers. As a result, hiring an OPT student is about 15.3% cheaper for employers than hiring a U.S. citizen or permanent resident. For 2025, the Social Security wage base limit is $176,100, but there is no cap for the Medicare tax.
How Would the DIGNITY Act Change OPT Taxes?
If the DIGNITY Act becomes law, all OPT participants and their employers would have to pay the full 15.3% FICA payroll tax on all earnings. This would apply no matter how long the student has been in the United States 🇺🇸. For example, a student earning $60,000 per year would lose about $4,590 in take-home pay, and the employer would owe a similar amount in extra payroll taxes.
The new tax would take effect as soon as the law is implemented, which would depend on the final legislative text and regulatory guidance. Both new and existing OPT participants would be affected.
Why Is the DIGNITY Act Being Proposed?
The DIGNITY Act is part of a larger effort to reform immigration and green card policies in the United States 🇺🇸. Supporters of the bill say it will fix what they see as “unfair advantages” in the OPT system and address problems in the labor market. They argue that OPT workers should pay the same taxes as U.S. workers, making the system fairer.
However, critics—including universities, advocacy groups, and international student organizations—warn that ending the FICA tax exemption will make the United States 🇺🇸 less attractive to global talent. They say this could hurt innovation, reduce campus diversity, and weaken the country’s competitiveness.
Who Would Be Most Affected?
- Students: Losing the FICA tax exemption would mean less money in students’ pockets. Many would have to adjust their budgets, save less, or even reconsider staying in the United States 🇺🇸 after graduation. Some may decide not to study in the United States 🇺🇸 at all.
- Employers: Especially for small businesses and startups, higher payroll costs could mean hiring fewer OPT students or looking for domestic workers instead. The extra 7.65% employer tax could be a big burden.
- Universities: Schools worry that fewer international students will apply, leading to lower tuition revenue and less campus diversity. This could also affect the United States 🇺🇸’s reputation as a top destination for global education.
- Indian Students: Students from India 🇮🇳 make up one of the largest groups on OPT. They would be especially hard hit by the new tax, as many rely on OPT to gain work experience and support themselves after graduation.
Stakeholder Perspectives
Supporters of the DIGNITY Act say the change would level the playing field for U.S. workers and address labor market concerns. They argue that OPT students should not have a tax advantage over citizens and permanent residents. Some lawmakers and officials, including the current USCIS Director Joseph Edlow, have even called for ending the OPT program altogether, citing worries about job competition and program abuse.
On the other hand, universities and advocacy groups strongly oppose the change. They argue that OPT is a temporary program, and taxing these students like permanent workers is unfair. They also warn that the new tax could drive talented students to other countries, hurting the United States 🇺🇸 in the long run.
Additional Provisions in the DIGNITY Act
- Dual Intent for F-1 Visas: The bill would let F-1 student visa applicants show they plan to stay in the United States 🇺🇸 after graduation, making it easier for students to plan their futures.
- O-1 Visa for STEM PhDs: STEM PhD graduates from U.S. universities could qualify for the O-1 visa, which is for people with special skills.
- More Green Cards: The bill would not count spouses and children toward the annual green card cap and would raise per-country limits from 7% to 15%.
- Premium Processing for Green Cards: Applicants waiting more than 10 years for a green card could pay $20,000 for faster processing.
- Dignity Program for Undocumented Immigrants: The bill would create a seven-year program offering renewable legal status for undocumented immigrants who meet certain requirements.
Recent Developments and Political Context
The OPT program has become a hot topic in U.S. politics. Some lawmakers, especially conservatives, argue that it takes jobs away from Americans and is open to abuse. Others see it as a key way to attract and keep global talent. The DIGNITY Act is promoted as a bipartisan solution, but the FICA tax provision for OPT students is one of its most debated parts.
As of now, there is no official date for when the FICA tax change would take effect. The bill is still making its way through Congress, and changes are possible before it becomes law.
What Should Students, Employers, and Universities Do Now?
- Students: Keep a close eye on the bill’s progress. Start planning for possible income reductions by adjusting your budget. Talk to your university’s international student office or a tax professional for advice.
- Employers: Prepare for the chance that payroll costs for OPT hires could rise. Consider how this might affect your hiring plans and budget.
- Universities: Stay involved in advocacy efforts, keep students informed, and think about how changes could impact enrollment and finances.
Where to Find More Information
For the latest updates on the DIGNITY Act and its impact on OPT and FICA tax exemption, check official sources like Congress.gov and your university’s international student office. The National Association of Foreign Student Advisers (NAFSA) also provides detailed analysis and updates on the bill’s progress.
Looking Ahead: What’s Next for OPT and the DIGNITY Act?
The future of the OPT FICA tax exemption depends on what happens in Congress over the next few months. If the DIGNITY Act passes as written, the new tax rules could start as soon as late 2025 or early 2026. Students, employers, and universities should stay alert and be ready to act quickly if the law changes.
As reported by VisaVerge.com, the proposed end of the FICA tax exemption for OPT students is one of the most closely watched parts of the DIGNITY Act. The outcome will shape the financial and educational landscape for thousands of international students and the institutions that rely on them.
Practical Tips for Affected Communities
- Stay Informed: Follow updates from your university, trusted news sources, and official government websites.
- Plan Ahead: If you are an OPT student, think about how a 15.3% tax could affect your take-home pay and savings. Employers should review their hiring budgets.
- Seek Help: If you have questions about your tax status or the DIGNITY Act, talk to a qualified immigration attorney or tax expert. The IRS website also offers information on FICA tax rules for nonresident aliens.
- Advocate: Universities and student groups can contact lawmakers to share their views on the proposed changes.
Conclusion
The DIGNITY Act of 2025 could bring big changes to the OPT program and the FICA tax exemption. While the bill is still under debate, students, employers, and universities should prepare for the possibility of higher taxes and new rules. Staying informed and planning ahead will help everyone adjust if the law changes. The coming months will be critical for the future of OPT and international education in the United States 🇺🇸.
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