Do F1 Students Pay Taxes? Exemptions, Treaties, and Filing

Yes, F1 students in the U.S. pay taxes on most U.S.-source income, but the rules are different from those for citizens and green card holders. For your first five calendar years on an F1 visa, you’re treated as a nonresident alien for tax purposes: you owe federal income tax on wages and certain scholarship money from U.S. sources, you’re exempt from Social Security and Medicare taxes, and you file a nonresident return using Form 1040-NR. Whether you actually owe anything depends on how much you earn, whether your home country has a tax treaty with the U.S., and the type of income involved.

The Five-Year Nonresident Window

F1 students are classified as “exempt individuals” for up to five calendar years, meaning days spent in the U.S. during that period don’t count toward the Substantial Presence Test the IRS uses to decide who is a resident alien.¹ A partial year counts as a full year. If you arrived in August 2022, your exempt calendar years are 2022 through 2026.

The distinction matters because nonresident aliens are taxed only on U.S.-source income. Resident aliens are taxed on worldwide income the same way U.S. citizens are.² During your first five calendar years on F1, you’re almost always the former.

What Income You Owe Tax On

Wages From Authorized Work

Pay from on-campus jobs, Curricular Practical Training (CPT), and Optional Practical Training (OPT) is taxable. Your employer will issue a W-2 and withhold federal income tax from each paycheck, just like for any other employee.

Scholarships and Fellowships

Scholarship money that pays for tuition, required fees, books, supplies, and course equipment is tax-free. Anything applied to room and board, travel, or personal living costs is taxable. If your scholarship or fellowship requires you to teach or do research as a condition, the portion tied to those services is generally taxable as well.³

Bank Interest

Interest earned on U.S. bank, credit union, and savings-institution deposits is not taxable to nonresident aliens, as long as it isn’t connected to a U.S. business you run.⁴ If you park savings in a U.S. checking or savings account, the interest is yours to keep.

Capital Gains

Capital gains from selling stocks or other investments follow a separate rule. If you were physically present in the U.S. for fewer than 183 days during the tax year and the gains aren’t tied to a U.S. trade or business, you generally owe no U.S. tax on them. If you were present for 183 days or more, a flat 30% tax applies to net capital gains from U.S. sources.⁴ Most F1 students in the U.S. for a full academic year will cross that threshold, so factor it in before trading.

You’re Exempt From Social Security and Medicare Taxes

Nonresident F1 students don’t pay FICA taxes on wages earned in connection with their visa purpose. That’s 6.2% for Social Security plus 1.45% for Medicare, or 7.65% of your paycheck that a U.S. citizen doing the same job would lose.⁵ The exemption lasts as long as you remain a nonresident alien, which lines up with the five-calendar-year exempt period.

Payroll systems sometimes withhold FICA anyway. If yours does, ask the employer to correct it and refund the amount. If the employer won’t, you can file Form 843 with Form 8316 and a copy of your W-2 to claim the refund directly from the IRS.⁵

Tax Treaties Can Reduce What You Owe

The U.S. has income tax treaties with dozens of countries, and many contain provisions that lower or eliminate tax on student income. The details vary. The China treaty exempts up to $5,000 per year of student wages. The South Korea treaty exempts $2,000 per year with a five-year cap. Some treaties also exempt scholarship income entirely.

To claim a treaty benefit on wages, give your employer Form 8233 before withholding begins. A new form is required each year and for each employer.⁶⁷ For scholarship or other non-wage income, Form W-8BEN plays the same role with the withholding agent.

Even when a treaty wipes out your entire U.S. tax bill, you still have to file a return reporting the treaty-exempt income.⁸ Not filing because you owe nothing is a common and avoidable mistake.

Deductions Are Limited (With One Big Exception)

Nonresident aliens don’t get the standard deduction. Federal law fixes it at zero for this group, so the $16,100 that single filers get for 2026 is off the table.⁹¹⁰ Most tax credits available to resident filers are also off-limits, and you generally can’t itemize.

Students from India get a major exception. Article 21(2) of the U.S.-India Income Tax Treaty gives Indian students temporarily present in the U.S. for education the same deductions as U.S. citizens, including the standard deduction. The IRS states this directly in the Form 1040-NR instructions and waives the filing requirement for Indian treaty students whose gross income falls below the standard deduction.⁸ If you’re from India, this can be worth thousands of dollars.

What You Have to File

Every F1 student who was physically present in the U.S. during the calendar year should file Form 8843, even with zero income. This form documents your exempt-individual status.¹¹ Skipping it puts your nonresident classification at risk, which could expose your worldwide income to U.S. tax.

If you had taxable U.S. income, you also file Form 1040-NR. You need it any year you were engaged in a U.S. trade or business, which includes working as an employee, even if a treaty exempts the income. You also need it if you had U.S.-source income and withholding didn’t cover the full tax due.⁸ If your only income was from foreign sources or tax-exempt U.S. bank interest, Form 8843 alone is enough.¹²

Documents you’ll need include your W-2 from any employer and Form 1042-S if you received scholarship income or treaty-exempt payments.

Deadlines

Form 1040-NR is due April 15 of the following year. If you’re only filing Form 8843 with no tax return, the deadline is June 15.¹³

F2 Dependents

A spouse or child on an F2 visa is also an exempt individual and files their own Form 8843 each year, regardless of income.¹¹ If a dependent needs to file a tax return and doesn’t have a Social Security Number, apply for an ITIN using Form W-7.¹⁴

What Changes After Year Five

Once you’ve used your five calendar years of exempt status, your days in the U.S. start counting toward the Substantial Presence Test.¹ A full-time student still in the U.S. will almost certainly cross the 183-day threshold in that sixth calendar year and become a resident alien for tax purposes.

That year is a dual-status tax year. Nonresident rules apply through the transition date, and resident rules apply from that point forward.¹⁵ Once you’re a resident alien, you owe tax on worldwide income, FICA taxes apply to your wages, most treaty benefits go away (unless the specific treaty says otherwise), and you finally gain access to the standard deduction and the full set of tax credits.

State Income Taxes

Federal rules are only half the picture. F1 students working in a state with an income tax typically owe state tax as well, and thresholds and rates vary widely. A few states have no income tax at all; others require a return from nonresidents who earned even small amounts. Your employer should withhold state tax where required, and you’ll file a state nonresident return alongside your federal forms. Your university’s international student office or the state tax agency can confirm what applies to you.

1
Internal Revenue Service. Publication 519 – U.S. Tax Guide for Aliens
2
Internal Revenue Service. Topic No. 851 – Resident and Nonresident Aliens
3
Office of the Law Revision Counsel. 26 USC 117 – Qualified Scholarships
4
Office of the Law Revision Counsel. 26 U.S. Code 871 – Tax on Nonresident Alien Individuals
5
Internal Revenue Service. Foreign Student Liability for Social Security and Medicare Taxes
6
Internal Revenue Service. About Form 8233, Exemption From Withholding on Compensation for Independent and Certain Dependent Personal Services of a Nonresident Alien Individual
7
Internal Revenue Service. Instructions for Form 8233
8
Internal Revenue Service. Instructions for Form 1040-NR (2025)
9
Office of the Law Revision Counsel. 26 U.S. Code 63 – Taxable Income Defined
10
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
11
Internal Revenue Service. About Form 8843, Statement for Exempt Individuals and Individuals With a Medical Condition
12
Internal Revenue Service. Foreign Students, Scholars, Teachers, Researchers and Exchange Visitors
13
Internal Revenue Service. Publication 4756 – Foreign Student and Scholar Volunteer Tax Return Preparation
14
Internal Revenue Service. About Form W-7, Application for IRS Individual Taxpayer Identification Number
15
Internal Revenue Service. Taxation of Dual-Status Individuals