I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.
See all posts Frank GogolDo I Have to Pay Taxes While Working on an H1B or Doing an OPT?
Updated on April 9, 2024
Written by
Written by
Reviewed by
Rohit Mittal
Reviewed by
Rohit Mittal
Rohit Mittal is the co-founder and CEO of Stilt. Rohit has extensive experience in credit risk analytics and data science. He spent years building credit risk and fraud models for top U.S. banks. In his current role, he defines the overall business strategy, leads debt and capital fundraising efforts, leads product development, and leads other customer-related aspects for the company. Stilt is backed by Y Combinator and has raised a total of $275M in debt and equity funding to date.
See all posts Rohit MittalAt a Glance
- On an H1B visa, you are required to pay federal, state, Social Security, and Medicare taxes based on your income.
- The federal income tax rate varies depending on your income level, ranging from 10% to 39.6%.
- H1B workers typically pay between 25% and 28% on taxable income.
- When working on Optional Practical Training (OPT), you will only have to pay federal, state, and city taxes, without the obligation to pay Social Security or Medicare taxes.
People that live in the United States have to have some type of visa to legally reside in the top immigrant nation.
In this article, we focus on answering questions for people that are in the US on an H1B visa or for students who have recently finished their studies and are planning to do an OPT in the US.
One of the first questions—and probably the most important question—people have revolves around how the tax system works and how much you have to pay while working in the US.
To cut straight to the chase, when working on an OPT, you only have to pay your federal, state, and city taxes.
However, when you start to work on an H1B visa, you will have to pay FICA taxes on top of those taxes, which include your Social Security and Medicare taxes.
So when working on an H1B visa, you definitely have to pay more taxes to the IRS than you would be doing an OPT.
Another rule when it comes to taxes and immigrants is that if you have passed a 5-year waiver period while on an F1 visa before starting your OPT, you will be required to pay more taxes.
Read on to learn more, or check out our video Salary After Taxes in US | How much can I save in USA?
How much tax do I have to pay when on an H1B visa?
On an H1B visa, you have to pay federal, state, Social Security, and Medicare tax based on your income.
The federal income tax rate ranges from 10% to 39.6%; the higher your income, the higher the tax you have to pay.
Usually, H1B workers have to have a certain level of income and therefore pay between 25% and 28% on taxable income. The exact amount of how much you have to pay can be found on the official website of the IRS.
Like in every country, when you work and have a job, you are required to pay taxes.
How much tax do I have to pay when working on OPT?
As mentioned before, working on an OPT is a lot different than working on an H1B because an OPT is not technically considered a job. An OPT is considered more of an internship and has accompanying lower wages to prove it.
Therefore, if you are on an OPT, you will only have to pay federal, state, and city taxes, but you will not have to pay for Social Security or Medicare.
Wrapping It Up
We hope this article has helped you understand the tax system for immigrants in the United States.
If you have any more questions about paying your taxes please feel free to contact us.
Likewise, if you have any information or stories you want to add in the comments section, please feel free to do so!
Good luck with your tax filing and make sure to check out the official homepage of the IRS for more information on what taxes you should be being in the United States as a resident!
Read More
- Why Was No Federal Income Tax Withheld From My Paycheck?
- Why Do I Owe Taxes?
- Why Do I Owe State Taxes?
- Are You Exempt from Federal Withholding?
- How to File Taxes With No Income
- Can You File Taxes Without a W2?
- H1B Taxes: Everything You Need to Know
Frank Gogol
I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.