Student FICA Exemption
The student Federal Insurance Contribution Act (FICA) exemption means that you, as a student-employee, will no longer pay the 7.65% of your earnings in Social Security tax if you meet the eligibility criteria.
In the 1950’s, the State of Texas entered into what is called a “Section 218 Agreement” with the Social Security Administration. Under this agreement, ALL state university employees became subject to the social security tax. In July of 1998, legislation was passed allowing states to modify this agreement. The State of Texas elected to modify our Section 218 agreement. As a result, effective July 1, 2000, Texas students who are enrolled at least half-time at state universities are excluded from paying Social Security/FICA tax on student employment at the university where the student is enrolled.
Business Officer Tip Sheet: FICA Exemption for Student Workers