US OPT Students Face Tax Changes, FICA Exemption on the Line

(UNITED STATES) International students working in the United States on OPT could soon see smaller paychecks and higher employment costs if Congress ends their exemption from Social Security and Medicare payroll taxes. Two bills now pending in Congress—the OPT Fair Tax Act introduced by Senator Tom Cotton and the Dignity Act of 2025—seek to require OPT participants and their employers to pay FICA taxes for the first time. As of October 27, 2025, both measures remain proposals, not law.

Under current rules, F-1 students using Optional Practical Training (OPT) can work in the U.S. for up to 12 months after graduation, with a possible 24-month STEM extension for certain fields. They pay federal and state income taxes like other workers. But they are generally exempt from FICA taxes—the payroll deductions that fund Social Security and Medicare—because of their F-1 status and temporary work permission tied to study. That exemption is central to today’s debate.

What the bills would change

Backers of the OPT Fair Tax Act argue that ending the exemption would put OPT participants on the same footing as U.S. workers who pay into Social Security and Medicare with every paycheck. The bill would require both the student and the employer to contribute to FICA at the same rates applied to other employees and companies.

The Dignity Act of 2025 takes a similar approach, matching OPT tax treatment to that of citizens and permanent residents. According to analysis by VisaVerge.com, this shared focus signals growing momentum in Congress to change how OPT is taxed, even though a final outcome is uncertain.

Key point: Both bills aim to remove the FICA exemption for OPT; both are pending as of October 27, 2025.

Policy proposals at a glance

• The OPT Fair Tax Act would end the FICA exemption for OPT participants. If enacted, both employee and employer would pay a combined 15.3% of wages toward Social Security and Medicare—split as:
  • 6.2% for Social Security (employee) and 6.2% (employer)
  • 1.45% for Medicare (employee) and 1.45% (employer)
• The Dignity Act of 2025 also seeks to end the FICA exemption for OPT, aligning payroll tax obligations with those of U.S. citizens.
• Status as of October 27, 2025: pending, not law.

Financial impact on students and employers

If either bill becomes law:

• OPT workers’ take-home pay would be reduced by the employee share (7.65%) of wages for FICA.
• Employers would face a matching 7.65% payroll cost for each OPT hire, increasing the total cost of employment.

Because hiring budgets are tight for many entry-level roles, these added payroll expenses could affect recruitment plans—particularly at small and mid-sized companies that rely on recent graduates for early-career roles.

Supporters say equal tax treatment is fair and ensures all workers contribute to public programs. Critics warn that higher taxes and costs could push international graduates to seek jobs in other countries, limiting the U.S. talent pool and weakening the appeal of American degrees. VisaVerge.com reports that some universities and employers are already modeling payroll scenarios in case FICA becomes mandatory for OPT.

Current legal status and immediate actions

What’s not in dispute is the legal status today: the FICA exemption still applies. That means employers and students should not change payroll behavior until law changes.

• Do not alter tax withholding forms because of these bills alone.
• OPT workers should continue completing Form W-4 with employers for income tax withholding and remain exempt from FICA under current rules.
• Employers should keep existing payroll settings for F-1 OPT hires until official guidance says otherwise.

Important warning

Mistaken early changes by payroll systems can cause improper FICA withholding. If Social Security or Medicare tax appears on pay stubs before any law change, employees should ask employers to correct the error and process repayments through normal payroll procedures.

Income tax deadlines and filing

Income tax rules still apply to OPT participants:

• OPT participants must report earnings and file U.S. tax returns by the regular deadline.
• For the 2024 tax year, the federal due date is April 15, 2025.
• Many students receive refunds when too much income tax was withheld. That refund process is separate from the FICA exemption.

Practical steps for current OPT workers

1. Keep your documentation current.
   • USCIS guidance on F-1 OPT, including standard OPT and STEM OPT, is available at: Optional Practical Training (OPT) for F-1 Students
2. Complete income tax paperwork with your employer.
   • Use the IRS Form W-4: Form W-4
3. Track deadlines.
   • File your federal return by April 15, 2025 for the 2024 tax year. Check state deadlines too.
4. Check your pay stubs.
   • Under current law, OPT workers should not see Social Security (OASDI) or Medicare taxes deducted. If you do, contact payroll immediately.
5. Plan for possible changes.
   • If a bill passes, employers and payroll providers will issue guidance with effective dates and instructions.

Records and documentation to keep

• Copies of offer letters
• I-20 updates for OPT
• Pay stubs and payroll records
• Correspondence with employers or payroll providers about withholding

Keeping these documents will help fix withholding errors and support accurate tax filings.

Broader context and next steps

OPT remains a vital bridge from study to work in the United States. It allows international graduates to apply skills in real-world roles and often leads to longer-term career steps. The current congressional debate focuses on whether that early work period should also require payroll tax contributions to Social Security and Medicare.

• Congress may amend details or change timelines.
• Until a bill is enacted and an effective date established, the status quo remains in place.

Takeaway: Follow official updates, avoid premature payroll changes, and be prepared—employers should document current practices and students should maintain thorough records in case FICA withholding needs correction or new rules take effect.