NCPA - National Center for Policy Analysis

Second Chance To Exempt Student Workers From Social Security

January 15, 1999

Student workers -- including graduate teaching assistants -- and their employers may be exempted from paying Social Security taxes on their earnings if their state governors act quickly, according to analyst Paul R. Farago.

  • Students employed by non-public high schools, colleges and universities have been exempted from paying the Social Security payroll tax on those earnings since 1951, says Farago.
  • And until 1983, states were allowed to exempt public workers' unions and their members.
  • As part of this process, most states did apply for and obtain the exemption for public schools and student workers, but Texas and Pennsylvania did not.

However, the omnibus appropriations bill passed in October 1998 permits states that have not already obtained the "students and schools" exemption to apply for it between January 1 and March 31, 1999. The request for the exemption must come from the states' governors.

Pennsylvania officials estimate the proposal would affect approximately 25,000 students and 532 schools in that state. Student workers and Pennsylvania schools would each save an estimated $5.1 million in taxes per year.

Source: Paul R. Farago, "Opt Out Was Buried In Oct. '98 Omnibus Appropriation Bill," Social Security Opt Out Website, January 1, 1999.


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