Foreign students might have to pay tax on OPT if US immigration bill passes
US to cut OPT tax break for foreign students (image: envato elements)A new immigration bill before the US Congress could eliminate a long-standing tax break for international students participating in the Optional Practical Training (OPT) programme. Under the proposed Dignity Act of 2025, foreign graduates would be required to pay Social Security and Medicare (FICA) taxes, sparking concern among university communities and immigrant advocacy groups.As per the bill summary, “The Dignity programme will allow undocumented immigrants in the US to earn legal status if they pass a criminal background check, pay back any taxes owed, and meet other requirements. Participants must also pay restitution to be eligible.”OPT is temporary employment that is directly related to an F-1 student’s major area of study. Eligible students can apply to receive up to 12 months of OPT employment authorisation before completing their academic studies (pre-completion) and/or after completing their academic studies (post-completion). However, all periods of pre-completion OPT will be deducted from the available period of post-completion OPT.OPT allows international students on F-1 visas to work in their field of study after graduation, with up to 90 days of unemployment permitted. Regular OPT lasts 12 months, while STEM graduates can extend it to a total of 36 months. Under recent proposals, OPT participants may be required to pay FICA taxes—Social Security at 6.2% of income up to the $1,68,600 wage cap (max $10,453.20) and Medicare at 1.45% on all earnings (no cap). At a $176,000 salary, this would mean $10,453.20 for Social Security and $2,552 for Medicare, totalling $13,005.20 in FICA contributions.A new bill proposes making F1 student visas ‘dual intent’, allowing international students to pursue US permanent residency without proving plans to return home. OPT participants would also be required to pay Social Security and Medicare taxes, also known as FICA, while still needing to qualify for employment-based visas to stay.
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| US to cut OPT tax break for foreign students (image: envato elements) |
A new immigration bill before the US Congress could eliminate a long-standing tax break for international students participating in the Optional Practical Training (OPT) programme. Under the proposed Dignity Act of 2025, foreign graduates would be required to pay Social Security and Medicare (FICA) taxes, sparking concern among university communities and immigrant advocacy groups.
As per the bill summary, “The Dignity programme will allow undocumented immigrants in the US to earn legal status if they pass a criminal background check, pay back any taxes owed, and meet other requirements. Participants must also pay restitution to be eligible.”
OPT is temporary employment that is directly related to an F-1 student’s major area of study. Eligible students can apply to receive up to 12 months of OPT employment authorisation before completing their academic studies (pre-completion) and/or after completing their academic studies (post-completion). However, all periods of pre-completion OPT will be deducted from the available period of post-completion OPT.
OPT allows international students on F-1 visas to work in their field of study after graduation, with up to 90 days of unemployment permitted. Regular OPT lasts 12 months, while STEM graduates can extend it to a total of 36 months.
Under recent proposals, OPT participants may be required to pay FICA taxes—Social Security at 6.2% of income up to the $1,68,600 wage cap (max $10,453.20) and Medicare at 1.45% on all earnings (no cap). At a $176,000 salary, this would mean $10,453.20 for Social Security and $2,552 for Medicare, totalling $13,005.20 in FICA contributions.
A new bill proposes making F1 student visas ‘dual intent’, allowing international students to pursue US permanent residency without proving plans to return home. OPT participants would also be required to pay Social Security and Medicare taxes, also known as FICA, while still needing to qualify for employment-based visas to stay.
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