US eyes ending OPT tax break for international students 

The OPT Fair Tax Act, introduced by Republican senator Tom Cotton last month, seeks to remove payroll tax breaks for international students on the US’s postgraduation work route who generally cannot access the social security benefits that the taxes fund.  

“Our tax code shouldn’t incentivise businesses to hire foreign workers. By ending the FICA tax exemption, we will put American workers first,” said senator Cotton. 

If implemented, the legislation would end the current rule that exempts international students on OPT from paying social security and healthcare taxes, known as Federal Insurance Contributions Act (FICA), on their US earnings.

“The FICA exemption creates an 8% hiring cost advantage when employers choose international students over US workers at identical salaries,” said Boston College professor Chris Glass. 

“But the exemption exists because most F-1 students can’t access Social Security benefits. The competitive distortion is real, but so is the rationale,” he explained. 

Under the new proposals, the 15.3% FICA tax on wages would be split equally between employee and employers, thus reducing international students’ earnings while on the workstream.

The proposed legislation comes amid increased scrutiny of OPT on various fronts, including from Trump’s newly appointed USCIS director Joseph Edlow, who vowed to end post-graduation OPT before he stepped into the role. 

More recently, senator Chuck Grassley called on the Department of Homeland Security (DHS) to end the workstream, alongside multiple legislative attempts lodged by republican senators to abolish the program.  

Our tax code shouldn’t incentivise businesses to hire foreign workers

Tom Cotton, US senator

Senator Cotton’s proposals must now pass both chambers of congress and achieve presidential approval before making it into law. But commentators say change is most likely to come through DHS rulemaking rather than leglislation and could be a part of broader high-skilled immigration reform.

“Since OPT was created by regulation, DHS has authority to modify it without legislation. So, likely, any significant changes in the short-term will come from DHS,” said Glass. The department did not immediately respond to The PIE News’s request for comment.

Notwithstanding recent efforts of populist Republicans to end OPT, the workstream generally occupies complicated political terrain, said Glass, adding that coalitions around reform “don’t map neatly onto traditional left-right divides”. 

“Studies show both complementary job creation in STEM fields but also localised displacement effects in entry-level roles in tight labour markets. So, evidence cuts both ways,” he continued.  

Renewed interest in the program follows the release of a new dataset, the OPT Observatory – “the most in-depth public resource on how the US retains international students after they graduate” – according to its authors.  

The dataset is the first institution-level, cohort-based map of OPT participants, showing where they work and which states retain them.  

According to Glass: “a move to eliminate or significantly restrict OPT would thrust 240,000+ international students currently on OPT into immediate uncertainty and strain the 2026/27 enrolment cycle” as prospective students reevaluate the value of studying in the US.  

In a recent NAFSA survey of more than 1,000 current US students, over half said they wouldn’t have enrolled at a US institution without the workstream.  

Glass and other commentators have raised alarms over polarised debates that frame the issue as a choice to either expand or eliminate the program, urging policymakers to consider the newly available Observatory data when making decisions.

The heightened scrutiny come as postgraduation work opportunities are increasingly fragile in the US, after the government announced plans to overhaul the H-1B skilled worker visa process in favour of higher-paid workers, after hiking the visa fee to $100,000 for new petitions outside the US.

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