US lawmakers have proposed taxing international students’ earnings from Optional Practical Training (OPT) program. Foreign students working in the United States under the OPT program are now exempted from paying FICA taxes. If the Act is passed, overseas students will be required to pay these taxes.
The Optional Practical Training program is a highly popular work-experience opportunity for overseas students in the United States.
Foreign students can acquire job experience in America during and after their studies through the Optional Practical Training (OPT) program, which lasts up to 12 or 24 months in total.
Taxing Earnings of OPT workers
The Dignity Act, introduced by US lawmakers, proposes to levy Social Security and Medicare taxes on the earnings made by international students undergoing the Optional Practical Training (OPT) program in America.
The Dignity Act proposes to tax the earnings of the OPT students by making them pay FICA (Social Security and Medicare) taxes.
Taxes under the Federal Insurance Contributions Act (FICA) are composed of the old-age, survivors, and disability insurance taxes, also known as Social Security taxes, and the hospital insurance taxes, also known as Medicare taxes.
The current tax rate for Social Security is 6.2% for the employer and 6.2% for the employee, or 12.4% total. The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total.
Currently, foreign students working as part of the OPT program in the United States are exempt from paying FICA taxes. If the Act is passed, foreign students will have to pay these taxes.
Only the Social Security tax has a wage base limit. The wage base limit is the maximum wage that’s subject to the tax for that year. For earnings in 2025, this base limit is $176,100. There’s no wage base limit for Medicare tax. All covered wages are subject to Medicare tax.
The Act also proposes to modernize student visas to streamline the process for students to stay and work after their education is complete, if they would like to.
Congresswoman María Elvira Salazar and Congresswoman Veronica Escobar, along with a group of 20 members, have introduced a new and improved version of the DIGNITY Act – the DIGNITY Act of 2025, calling it a bold, historic, and commonsense immigration reform bill.
One of the other key provisions of the Act is to introduce a Dignity Program, a 7-year earned legal status program allowing undocumented immigrants to live and work legally, with renewable status based on good conduct and restitution.
Termination of OPT Program
The Trump administration has been expressing calls for the termination of the Optional Practical Training (OPT) program, with proposals being put forth by lawmakers and US administrators.
Jessica Vaughan, the Center’s Director of Policy Studies, has questioned the popular Optional Practical Training program in its current form. Joseph Edlow, the new director of U.S. Citizenship and Immigration Services (USCIS), said he would end the Optional Practical Training (OPT) programme that allows foreign graduates to work in America post completion of their studies.