US Eyes Ending OPT Tax Break for International Students
A new law proposal in the United States called the OPT Fair Tax Act could remove a tax exemption that currently benefits international students working under the Optional Practical Training (OPT) program.
🔍What’s happening:
- Right now, international students on OPT don’t have to pay Social Security and Medicare taxes (FICA taxes) that’s about 8% of their income.
- The new proposal by Senator Tom Cotton wants to end this exemption, meaning both students and their employers would have to pay the extra 8% tax.
💬Why it’s being proposed:
- Senator Cotton says this exemption unfairly favors foreign workers because it makes them cheaper to hire than Americans.
- However, experts argue that the exemption exists for a reasonbecause international students can’t benefit from the US Social Security system anyway.
💼What this means for students:
- If the law passes, international students’ salaries would be taxed more, reducing their take-home pay.
- Employers might also be less likely to hire OPT students because their hiring costs would increase.
⚖️What’s next:
- The proposal still needs to pass both chambers of Congress and get presidential approval before becoming law.
- Experts believe that any real changes to OPT are more likely to come from the Department of Homeland Security (DHS) rather than Congress, since DHS has the authority to modify the program directly.
🌍Why it matters:
- OPT is very popular more than 240,000 international students currently use it to gain US work experience after graduation.
- Surveys show over 50% of international students wouldn’t have chosen the US without the OPT opportunity.
- If this law or similar restrictions are introduced, it could make the US less attractive for future international students.
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