International students in the United States 🇺🇸, especially those from India, may soon face higher taxes if the US Congress passes The DIGNITY Act of 2025. This bill, introduced in July 2025, would end the OPT tax exemption, forcing students and their employers to pay Social Security and Medicare taxes for the first time. The proposed change has sparked concern among students, universities, and businesses who rely on the Optional Practical Training (OPT) program.
The DIGNITY Act of 2025 is currently in the early stages of the legislative process in the US House of Representatives. Congresswomen María Elvira Salazar (R-FL) and Veronica Escobar (D-TX) reintroduced the bill, which includes a provision to revoke the FICA (Federal Insurance Contributions Act) tax exemption for OPT participants. If passed, this change would require both international graduates and their employers to pay a combined 15.3% payroll tax—6.2% for Social Security and 1.45% for Medicare, paid by both employee and employer.
What Is OPT and Why Does the Tax Exemption Matter?
The OPT program allows international students to work in the United States 🇺🇸 for up to 12 months after graduation, or up to 36 months for those in science, technology, engineering, and math (STEM) fields. Under current law, OPT participants are considered nonresident aliens for tax purposes. This means they do not have to pay FICA taxes, which saves them and their employers a significant amount of money each year.
For many students, especially those from India, this tax break is a key reason to choose the United States 🇺🇸 for higher education. The savings help offset high tuition and living costs, making it easier to afford studying and working in the country. Employers also benefit, as they do not have to pay their share of the payroll tax for OPT workers.
How Would the DIGNITY Act Change Things?
If the DIGNITY Act becomes law, the OPT tax exemption would end. All foreign graduates working under OPT would have to pay the full FICA tax, just like US citizens and permanent residents. Employers would also be required to pay their share. For a student earning $60,000 a year, this would mean an extra $4,590 in taxes taken out of their paycheck each year, with the employer paying the same amount.
Who Would Be Affected?
- Indian Students and Other International Graduates: The loss of the OPT tax exemption would directly reduce take-home pay. Students might need to cut back on spending, send less money home, or even reconsider coming to the United States 🇺🇸 for their studies. The extra tax burden could make studying in other countries more attractive.
- Employers: Companies, especially startups and small businesses, would face higher costs when hiring OPT workers. Some may hire fewer international graduates or look for talent elsewhere.
- US Universities: Schools worry that fewer international students will apply if the United States 🇺🇸 becomes less affordable. This could hurt tuition revenue and reduce campus diversity.
- The US Economy: The change could make the United States 🇺🇸 less competitive in attracting global talent, especially in STEM fields where international graduates play a big role.
Why Is This Happening Now?
The DIGNITY Act is part of a larger debate about immigration and the role of foreign workers in the United States 🇺🇸. Some lawmakers argue that the OPT program gives international students an unfair advantage over US graduates and is sometimes used by employers to avoid hiring Americans. Joseph Edlow, Director of USCIS, has called the program “ripe for abuse” and a “workaround” for cheaper labor.
On the other hand, university leaders, business groups, and immigrant advocates say that ending the OPT tax exemption would discourage talented students from coming to the United States 🇺🇸. They argue that the country needs these students to stay competitive in science and technology.
What Happens Next?
The DIGNITY Act of 2025 is still in the early stages. It has been introduced in the House of Representatives but has not yet become law. The bill will likely go through several rounds of debate and possible changes before any final vote. If the FICA tax provision remains in the final version and the bill passes, the new rule would take effect on a date set in the legislation. As of August 5, 2025, no specific start date has been announced.
What Should Students and Employers Do Now?
- Stay Informed: Students and employers should keep up with updates from the US Congress and trusted sources like university international student offices.
- Plan Ahead: If the law changes, students should budget for lower take-home pay. Employers should prepare for higher payroll costs.
- Seek Advice: Consulting with immigration attorneys or tax professionals can help students and employers understand their options and avoid surprises.
Broader Impacts and Ongoing Advocacy
The OPT tax exemption is just one part of the DIGNITY Act. The bill also includes proposals for faster green card processing and expanded legal pathways for immigrants. These changes could affect many people waiting for permanent residency in the United States 🇺🇸.
Advocacy groups, universities, and business leaders are working to keep the FICA exemption in place. They argue that removing it would hurt the United States 🇺🇸 in the global competition for talent. According to analysis by VisaVerge.com, the debate over the DIGNITY Act and the OPT tax exemption highlights the complex balance between protecting US workers and attracting the best minds from around the world.
Key Facts at a Glance:
- Current Law: OPT participants do not pay FICA taxes (15.3% total).
- Proposed Change: DIGNITY Act would end this exemption; both students and employers would pay full FICA taxes.
- Status: Bill introduced in July 2025, under review in the US Congress.
- Potential Impact: Higher costs for students and employers, possible drop in international student enrollment, and broader effects on US higher education and the economy.
Where to Find More Information
For the latest updates on the DIGNITY Act and the OPT tax exemption, visit the US Congress official bill tracking page. Students can also check with their university’s international student office or consult the USCIS website for official guidance.
Practical Tips for Affected Students
- Monitor News: Follow updates from trusted sources and your university.
- Review Finances: Plan for possible changes in your take-home pay.
- Ask Questions: Don’t hesitate to reach out to your school’s international office or a legal advisor for help.
- Stay Flexible: Be ready to adjust your plans if the law changes.
The future of the OPT tax exemption remains uncertain as the DIGNITY Act moves through the US Congress. Students, employers, and universities should stay alert and be ready to respond to any changes that may come.
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