What is the OPT program in the US?

The OPT program allows international students in the US to gain practical work experience in their field of study for up to 12 or 24 months after graduation.

FICA taxes are federal payroll taxes that fund Social Security and Medicare, consisting of employer and employee contributions.

Who is Senator Tom Cotton supporting with the OPT Fair Tax Act?

Senator Tom Cotton's bill aims to prioritize American workers by ending tax exemptions for employers of foreign OPT workers.

Home / Education / US May Tax Foreign Student Earnings

US May Tax Foreign Student Earnings

4 Dec

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Summary

US considers taxing foreign OPT workers' earnings with FICA taxes.
Proposed 'OPT Fair Tax Act' ends employer FICA tax exemption.
New tax could reduce US appeal for international students.

A proposed bill in the United States, the 'OPT Fair Tax Act,' aims to impose FICA taxes on earnings of foreign students participating in the Optional Practical Training (OPT) program. This legislation would eliminate existing tax exemptions for employers hiring these international workers, requiring both employees and employers to contribute to Social Security and Medicare taxes for the first time.

The potential implementation of FICA taxes on OPT earnings could significantly impact the United States' standing as a preferred study abroad destination. Experts suggest that reduced take-home pay for students and increased hiring costs for companies might deter future international student enrollment, especially in science, technology, engineering, and mathematics fields where OPT is widely utilized.

Furthermore, organizations like the Federation for American Immigration Reform (FAIR) are advocating for the termination of the OPT program altogether. If FICA taxes are enacted, or if the program faces termination, international students may explore alternative countries offering more favorable or stable labor market conditions for post-graduation work experience.