US Lawmakers Move to End Tax-Free Jobs for Foreign Grads
US lawmakers are considering a series of bills that could either scale back or secure the Optional Practical Training (OPT) programme for international graduates.
The OPT scheme allows foreign students on F-1 visas to work in the United States for up to 12 months after completing their studies. Graduates in science, technology, engineering and mathematics (STEM) fields can extend this period by a further 24 months. The programme was created through executive action rather than legislation, which has left its future open to political challenge.
Critics argue that OPT gives foreign graduates a cost advantage over domestic workers and provides a pathway into longer-term employment through H-1B visas and permanent residency. Supporters maintain that it helps US universities attract international students and enables companies to access skilled workers in competitive sectors.
One proposal, the DIGNITY Act, would require OPT participants to pay Social Security and Medicare taxes. At present, they are exempt from these contributions. Under the proposal, participants would pay a combined 15.3 percent in payroll taxes. Social Security contributions would be capped at an annual wage base of $176,100 for 2025, while Medicare taxes would apply to all earnings.
The HIRE Act takes a broader approach by targeting the use of foreign labour. It would impose a 25 percent levy on payments made to foreign workers or overseas service providers and would prevent companies from claiming tax deductions on those payments.
The PAUSE Act, introduced by Congressman Chip Roy, proposes more extensive restrictions. It would eliminate OPT entirely and limit the H-1B visa system by removing the option for visa holders to adjust their status to permanent residency.
In contrast, the Keep Innovators in America Act seeks to place the OPT programme on a statutory footing. The bipartisan bill, supported by Representatives Sam Liccardo, Jay Obernolte and Raja Krishnamoorthi, aims to ensure that international graduates, particularly those in STEM fields, can continue to work in the United States after completing their studies.
The Department of Homeland Security has also indicated that it may introduce regulatory changes to the programme. This has added uncertainty for both students and employers.
International students contribute significantly to university funding and research activity. Many companies also depend on OPT graduates to address skills shortages, particularly in technology and engineering.
