OPT to be taxed: Foreign students face 15% payroll hit under new US Senate bill

Foreign students working in the U.S. under the OPT program could soon see reduced paychecks as Senator Tom Cotton moves to end their FICA tax exemption through a new bill—the OPT Fair Tax Act.

The proposed legislation would require both foreign students on Optional Practical Training (OPT) and their employers to pay Federal Insurance Contributions Act (FICA) taxes—covering Social Security and Medicare. Currently, these workers are exempt from such taxes.

“The bill ends the unfair tax exemption for foreign workers and puts American workers first,” Cotton stated, signaling a broader policy shift aimed at tightening rules around work authorizations for international graduates.

OPT allows F-1 visa holders to gain up to 12–24 months of work experience in the U.S. post-graduation. But under the OPT Fair Tax Act, employers must match contributions just as they would for U.S. citizens, effectively increasing the cost of hiring OPT talent.

FICA taxes include a 6.2% Social Security tax and a 1.45% Medicare tax from both employer and employee—totaling 15.3%. For 2025, the wage base cap for Social Security is $176,100, while Medicare has no cap.

The bill also seeks to amend the Internal Revenue Code of 1986 to classify OPT employment as taxable under Social Security law. If passed, it would eliminate the financial incentive for companies to hire OPT workers over U.S. graduates.

The OPT program itself faces broader scrutiny. Some lawmakers and former Trump administration officials, including USCIS director Joseph Edlow, have called for its termination. The Dignity Act—another pending bill—also proposes FICA taxation on OPT earnings.

Policy analysts warn the new tax burden may deter international students from staying in the U.S. workforce post-study, while supporters argue it levels the playing field for American workers.