Rep. Grothman: Introduces OPT Fair Tax Act to end tax loophole favoring foreign workers over American graduates

(Washington, D.C.) – Today,Congressman Glenn Grothman (R-WI) introduced the OPT Fair Tax Act, legislation that will close a perverse loophole that harms American workers. 

Under current law, foreign workers in the Optional Practical Training (OPT) program are exempt from paying Social Security and Medicare payroll taxes, creating an incentive to hire these foreign workers over American citizens. The OPT Fair Tax Act will ensure that OPT employment is treated the same as other employment under federal payroll tax law. 

Senator Tom Cotton (R-AR) introduced companion legislation in the Senate earlier this Congress. 

Read the Fox News exclusive HERE. 

“Americans should not be put at a disadvantage because Washington created a loophole that favors hiring foreign workers over qualified U.S. citizens,” said Congressman Glenn Grothman. “Right now, the federal government has created a financial incentive to hire foreign workers over Americans. As a result, too many young Americans graduating from our colleges and universities are forced to compete against a system that tilts the playing field against them. Congress should be focused on opening doors for young Americans, helping U.S. graduates find good-paying jobs, and ensuring employers are encouraged to hire Americans first, not creating incentives for companies to bypass American talent.” 

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

“The OPT Fair Tax Act stands to raise $32 billion while bringing fairness to the OPT program. The tax code shouldn’t create incentives for businesses to prefer hiring OPT participants over Americans.” – Jeremy Neufeld, Director of Immigration Policy at the Institute for Progress

Background Information

The Optional Practical Training (OPT) program allows certain foreign students on F-1 visas to work in the United States after completing their studies. Current law exempts many OPT workers and their employers from paying Social Security and Medicare payroll taxes under the Federal Insurance Contributions Act (FICA). 

This tax exemption creates a financial incentive for employers to hire OPT workers over American graduates because employers can avoid payroll taxes that would otherwise apply to U.S. workers performing similar jobs. The advantage is especially significant among recent bachelor’s and master’s degree graduates participating in the program. 

Between Fiscal Years 2017 and 2022, approximately 330,000 students participated in OPT annually, including more than 215,000 master’s degree students. In addition to disadvantaging American workers, the exemption reduces funding for Social Security and Medicare. A January 2026 analysis estimated that eliminating the OPT payroll tax exemption would increase federal revenue by between $27 billion and $36 billion over ten years. 

The OPT Fair Tax Act amends Section 3121(b)(19) of the Internal Revenue Code and Section 210(a)(19) of the Social Security Act to clarify that F-1 visa holders participating in OPT are not exempt from Social Security and Medicare payroll taxes. Both OPT workers and their employers would therefore pay the same payroll taxes paid by American workers and businesses.