OPT to H-1B: Every Money Decision, in the Order You Face Them
Not general advice with a visa disclaimer bolted on. The eight decisions between your OPT start date and your H-1B approval — each with the rule, the number and the date behind it.
Reviewed by Deepak Middha, CA, Series 65
Last reviewed August 24, 2026 Sources verifiedFull profile
- Where you are on the timeline decides everything else
- Decision 1 — Size your cash by the clock, not by a rule of thumb
- Decision 2 — Know the exact date the 7.65% starts
- Decision 3 — The year you switch is the year to check your filing position
- Decision 4 — Take the 401(k) match even if you might leave
- Decision 5 — The Roth IRA question, answered properly
- Decision 6 — Cap-gap now runs to April 1, not October 1
- Decision 7 — What the six-figure H-1B fee headlines should do to your plan
- Decision 8 — The date on your I-94 is about to matter more than it ever has
- The decision table
- What not to do
- Frequently asked questions
- The bottom line
- Official sources
Between the day your OPT starts and the day your H-1B is approved you will make about eight money decisions. Most people make several of them badly, and almost always for the same reason: the advice they find was written for someone with a permanent right to work, and you do not have one yet.
That changes the answers, not just the tone. Your paycheck is taxed differently from your American colleague's. Your emergency fund is sized by a legal clock, not a rule of thumb. Your 401(k) has an exit cost nobody in the next cubicle has ever thought about. And one of the rules that governs your cash flow changed in 2025, so a lot of what you will read elsewhere is quietly out of date.
This page walks the decisions in the order you meet them. Every number is tied to the rule it comes from, and every rule is listed at the end.
Quick Answer
One month of cash, then the full employer match, then cash out to 90 days. On OPT your wages are usually exempt from the 7.65% FICA tax — that gap is your funding source, not spending money. Size the cushion to the clocks that actually apply to you: 90 days of unemployment on post-completion OPT, 150 days in total across OPT plus the STEM extension (an aggregate cap, not a reset), and a 60-day grace period after F-1 ends — 30 days for students admitted under the fixed-admission rule taking effect September 15, 2026. Cap-gap now runs to April 1 of the relevant fiscal year, not October 1. Your take-home then changes when FICA starts on your first H-1B paycheck, and your filing position changes as your US tax residency does — the India-treaty deduction stops applying once the qualifying student period ends, though a full-year resident may instead qualify for the ordinary resident standard deduction.
August 24, 2026 update — a new proposed H-1B fee
The administration has proposed a separate regulation establishing a $103,265 fee for certain new H-1B applications. As currently proposed, the fee would apply to all cap-subject H-1B petitions, including a cap-subject F-1-to-H-1B change-of-status petition filed inside the United States. It would not apply to genuinely cap-exempt petitions. The employer-petitioner, not the student beneficiary, would pay it. This remains only a proposed rule and no fee is currently being collected. Decision 7 below has the full scope.
Last reviewed August 24, 2026. Policy items on this page were verified against the primary sources listed at the end on that date. One is in active litigation, one is at the very start of notice-and-comment rulemaking, and one is a final rule facing a pending challenge — so check the date before you rely on anything here.
Where you are on the timeline decides everything else
The same person needs different advice four times in three years. Find your row first.
| Phase | What changes about your money | The clock that governs it |
|---|---|---|
| Final year of study, on CPT | Wages usually exempt from FICA; income small and irregular | 12 months or more of full-time CPT eliminates post-completion OPT at that educational level |
| Post-completion OPT (12 months) | First real salary; FICA usually still exempt; benefits enrolment begins | 90 days of unemployment, and only 30 days from your DSO's SEVIS recommendation to get the I-765 to USCIS |
| STEM OPT extension (24 months) | Salary rises; two more lottery attempts | 150 days of unemployment in total across both periods; a timely-filed extension carries work authorisation up to 180 days past EAD expiry |
| Selected, waiting for the start date | Cash flow unchanged; certainty transformed | Cap-gap runs to April 1 of the relevant fiscal year, not October 1 |
| H-1B approved and started | FICA generally begins; days in H-1B status count toward the Substantial Presence Test, but tax residency may not change until the following year | 60 unpaid days if the job ends, capped by your petition's validity |
Decision 1 — Size your cash by the clock, not by a rule of thumb
"Three to six months of expenses" is advice for someone who can take any job tomorrow. You cannot. Your cushion has to cover a period in which working is either illegal or capped — and those periods have exact lengths written into regulation.
The four clocks that will spend your savings
- 90 days — unemployment allowed during post-completion OPT. Past that without qualifying employment and your SEVIS record is at risk.
- 150 days — the total allowed across post-completion OPT and the STEM extension. Burn 40 days on initial OPT and you have 110 left, not 150.
- 60 days — the F-1 grace period once OPT ends. No work is permitted during it. It becomes 30 days for students admitted under the fixed-admission rule.
- 60 days — the H-1B grace period after a job ends. Also unpaid, also capped: the regulation gives you up to 60 consecutive days or the end of your petition's validity, whichever is shorter, once per validity period.
So the honest question is not "how many months of expenses" but "how many unpaid days could I face, and what is a day worth to me?"
| Your monthly burn | 90 unpaid days costs | 150 unpaid days costs |
|---|---|---|
| $2,500 | $7,500 | $12,500 |
| $3,500 | $10,500 | $17,500 |
| $4,500 | $13,500 | $22,500 |
| $6,000 | $18,000 | $30,000 |
Add a one-way flight and a broken lease if you want the number that survives the worst case. The point of the table is that a figure like 150 days is not abstract — it has a dollar value you can bank towards.
Where to hold it
- In cash you can reach in one business day. A high-yield savings account, not a brokerage, not a CD with a maturity date past your EAD.
- In dollars. Holding your emergency fund in rupees means a currency move can shrink your runway in the exact month you need it.
- Not in your 401(k). Reaching that money early costs a 10% penalty plus tax, which is precisely the outcome the cushion exists to prevent.
- Not in India at all until the US cushion is full. See why keeping too much money in India backfires.
Decision 2 — Know the exact date the 7.65% starts
This is the largest single change to your take-home pay in the whole transition, and it does not arrive gradually.
While you are a nonresident alien in F-1 status doing work USCIS authorised as part of that status — which includes CPT, post-completion OPT and the STEM extension — your wages are generally exempt from Social Security and Medicare tax. That is 6.2% plus 1.45%, 7.65% of gross, that never leaves your paycheck. H-1B is not on the IRS's exempt list.
There are two ways the exemption ends, and most people only plan for one of them.
The two ways the exemption ends
- You change to H-1B — the exemption stops with your first H-1B paycheck. No proration, no transition, no notice from payroll beyond a smaller net number.
- Your exempt-individual period runs out first — days of US presence generally stop being excluded after 5 calendar years in relevant F, J, M or Q status, prior years in those statuses count toward the limit, and "any part of" a calendar year generally counts as a whole one, so an August arrival can burn an entire year on five months of presence. After that your days count toward the Substantial Presence Test, and if you become a resident alien, FICA can begin while you are still on F-1.
| Annual salary | 7.65% FICA, once it starts | Per month |
|---|---|---|
| $75,000 | $5,738 | $478 |
| $95,000 | $7,268 | $606 |
| $120,000 | $9,180 | $765 |
| $150,000 | $11,475 | $956 |
Social Security's 6.2% stops at the annual wage base; Medicare's 1.45% never does. Below the base — which covers most first and second jobs — the flat 7.65% above is the right planning number.
The practical move: while you are exempt, treat the 7.65% as though it were already being withheld and route it to savings. It funds most of your 90-day cushion inside a year, and when the deduction does start your lifestyle has already absorbed it.
If FICA was withheld while you were exempt, do this
- It is refundable, and on a full year of OPT wages it is usually a four-figure amount.
- Ask your employer first — a payroll correction is far faster than the IRS.
- If they will not or cannot refund it, file Form 843 with Form 8316, attaching your W-2, the visa page of your passport, your I-20 with the OPT endorsement and your EAD.
- Refund claims have a limitations period. Chase old years before they close rather than "getting to it later".
Decision 3 — The year you switch is the year to check your filing position
This is the part of the transition most often described badly, in both directions. It is not true that every F-1-to-H-1B move produces a dual-status return, and it is not true that your tax bill necessarily jumps. What is true is that three things can move at once, and the combination decides your answer.
Your residency test. For up to five calendar years as an F-1 student, days of US presence generally do not count toward the Substantial Presence Test. Prior calendar years in relevant F, J, M or Q exempt-individual status can count toward that five-year limit, and part of a calendar year generally counts as one calendar year. Other residency rules or elections can also change the result. Once the exempt-individual period ends, days start counting — 31 days in the current year and 183 across a weighted three-year window (all of this year, a third of last year, a sixth of the year before). Days in H-1B status always count.
Which forms that implies. While you are a nonresident alien, the return is generally Form 1040-NR, and an exempt individual generally files Form 8843 to claim excluded days. Once you are a resident alien for the full year, you generally file Form 1040 like anyone else. Which of those describes you depends on your own day count, not on your visa label — so establish the residency starting date first and let the forms follow.
What happens to the India-treaty deduction. Article 21(2) of the US–India treaty lets students and business apprentices from India claim the standard deduction on a Form 1040-NR — $16,100 for a single filer in 2026. Almost no other nationality gets this. The India-treaty deduction no longer applies after the qualifying student period. A full-year US resident may instead qualify for the ordinary resident standard deduction. A dual-status filer generally cannot claim the standard deduction unless a valid election allows the person to be treated as a full-year resident. So losing the treaty benefit is not automatically a loss — the question is what you become, not what you stop being.
Whether the switch year is dual-status at all. An October 1 H-1B start is 92 days — not enough on its own to meet the 183-day test — so many people are nonresident for that entire year and become resident on January 1 of the next one. Others meet the test because prior-year days now count a third and a sixth, in which case residency starts mid-year and the return is dual-status. A first-year choice election is available in some circumstances and changes the answer again.
Where a dual-status year actually bites
- A dual-status filer generally cannot take the standard deduction, unless a valid election lets them be treated as a resident for the whole year. Itemised deductions otherwise.
- A dual-status filer generally cannot file a joint return — unless married to a US citizen or resident and making the election to be treated as a resident for the full year.
- This is the scenario worth planning for, and it is a possible outcome of the switch year, not an inevitable one.
- If your own day count points at a dual-status year, set money aside in the month your H-1B starts rather than discovering it in April.
Run your own year count in the F-1 tax calculator, read the mechanics in the substantial presence test guide, and see what the first fully-resident return looks like in the H-1B first tax return guide.
Decision 4 — Take the 401(k) match even if you might leave
The objection is always the same: why lock money into a US retirement account when I might be in Bengaluru in eighteen months? It is a fair question, and the answer usually favours contributing — but it depends on specifics worth checking rather than on a slogan.
The objection
- "I might have to leave, so I will skip the 401(k)."
- "I will start once I have a green card."
- "I would rather invest that money in India, where I understand the market."
The arithmetic
- A 50% match on 6% of salary is a 50% return on that contribution before the market does anything at all.
- If the employer match is vested, it will often outweigh the additional 10% early-distribution penalty. Income tax and applicable withholding still apply, and the final result depends on vesting, the match formula, tax status and available penalty exceptions.
- You do not necessarily have to cash out. The vested account balance remains yours and may generally be left in the plan or rolled into an IRA, subject to the plan's rules, the receiving custodian's policy for non-US residents, and US and foreign-country tax considerations.
What to check in your first week of benefits
- The match formula. "50% up to 6%" and "100% up to 4%" are different amounts of money. Contribute at least to whatever the cap is.
- The vesting schedule. Your own contributions are always 100% vested — nothing you defer from your own paycheck can be forfeited. Employer contributions may vest over two to four years, sometimes on a cliff, and leaving before the schedule completes sends the unvested portion back to the plan. That is why the match is only "free money" once it has vested. Ask for the exact date.
- The 2026 elective deferral limit: $24,500. You do not have to reach it. You do have to reach the match.
- Withholding is not the final tax bill. Amounts withheld on a distribution are a prepayment; the actual liability is settled on your return and can be higher or lower.
- The 10% additional tax has statutory exceptions. Separation from service at or after age 55, substantially equal periodic payments and disability are among them — see 72(t) SEPP withdrawals. Whether any applies to you is a facts question, not a default.
What happens to the account afterwards is a well-mapped decision rather than an open risk — see what happens to your 401(k) when you leave the USA, why there is no direct pipe into NPS or PPF, and run your own numbers in the 401(k) return-to-India calculator.
Decision 5 — The Roth IRA question, answered properly
Most pages either tell students they cannot have an IRA, or tell them to open one without mentioning the condition that actually decides it. Both are wrong.
There is no citizenship or residency test for contributing to a traditional or Roth IRA. What there is, is a compensation test — and IRS Publication 590-A is specific about it: compensation does not include "any amounts (other than combat pay) you exclude from income."
What that means in practice
- Your W-2 wages from OPT employment are compensation, so they support an IRA contribution.
- Article 21(2) gives you a deduction, not an exclusion, so claiming it leaves your wages intact as compensation.
- If you claim a treaty article that excludes wages from income, the excluded amount cannot support a contribution. Check what is left before you contribute.
The limits for 2026: $7,500 if you are under 50, with the direct-Roth phase-out for a single filer running from $153,000 of modified AGI to $168,000. Below that range, contribute directly. Above it, the backdoor Roth route is the answer — check first with the backdoor Roth eligibility calculator.
There is also a reason to prefer Roth specifically if you may not stay. A traditional pre-tax withdrawal taken later as a nonresident faces a default 30% withholding unless a treaty rate applies; a qualified Roth withdrawal is money you have already paid tax on at a rate you knew. Roth vs traditional for NRIs works through the trade-off. If your employer offers an HDHP, the HSA is worth a look too — with one caveat, which is that an HSA does not travel well.
Decision 6 — Cap-gap now runs to April 1, not October 1
This is the correction that matters most to your cash flow, and it is the one most pages have not made.
Cap-gap is the bridge between the day your F-1 status or OPT ends and the day H-1B employment can begin. It used to run only to October 1. The H-1B modernization final rule, effective January 17, 2025 and first applied from the FY2026 registration season, moved that to April 1 of the fiscal year the H-1B is requested for, or the validity start date of the approved petition, whichever is earlier.
For a spring graduate whose OPT ends in May, that is up to six additional months of authorised, paid work — easily the largest single line item on this page.
How it actually works
- Your employer registers you in March — registration is a form and a non-refundable $215 fee per beneficiary (the FY2027 rate, per USCIS). Being registered is not being selected.
- The petition is filed as a change of status — with a requested start date between October 1 and April 1 of the following year.
- The extension is automatic — there is no application and no new EAD; the DSO issues an updated Form I-20 as evidence, but the extension exists whether or not the document is in hand.
- Status and work authorisation are separate benefits — employment authorisation is extended only if the student was in an authorized period of post-completion OPT when the petition was filed. A student already in the grace period gets the status extension without the right to work.
What breaks cap-gap
- OPT that had already expired when the petition was filed. If your EAD ended in February and the petition goes in April, there is nothing to extend for work purposes — you may still get the status extension, but not the right to work.
- Consular processing instead of change of status. Cap-gap requires a change-of-status request on the Form I-129.
- A denied, rejected, revoked or withdrawn petition — or a change-of-status request that is denied or withdrawn even where the petition itself is approved for consular processing. The cap-gap extension stops and you do not get to run to April 1.
- Not being selected. No selection, no cap-gap. You are back on whatever OPT time remains.
If cap-gap ends early, work authorisation and permission to stay end at different times
Losing cap-gap ends your work authorisation — if your underlying OPT end date has already passed, you stop working on the date the extension terminates.
It does not usually end your permission to be here on the same day. USCIS states that a student whose cap-gap petition is denied, rejected, revoked or withdrawn generally has the standard 60-day grace period to depart, measured from the notification of that outcome, or from the date the extension of status terminated or the program end date, whichever is later.
The 60-day grace period does not apply where the change-of-status request was denied, or the petition revoked, because of a status violation, misrepresentation or fraud. In those cases USCIS expects the student to leave the United States immediately.
Those are two different clocks and they are worth writing down separately, because the first one is about your employer and the second is about your flight.
Map your own dates with the OPT calculator before you assume you are covered, and read what lottery results mean for F-1 OPT students for the document trail.
Decision 7 — What the six-figure H-1B fee headlines should do to your plan
Three separate six-figure numbers are now circulating, and they are not the same thing. One was struck down, one was never formally proposed, and one is a live proposal. None of them is a bill anyone owes today, and none belongs in your personal budget — but the newest one, as drafted, would cover a student changing status inside the US. That makes it worth reading carefully rather than dismissing.
August 24, 2026 update — a proposed $103,265 cap-subject H-1B fee
As currently proposed, the $103,265 fee would apply to all cap-subject H-1B petitions, including a cap-subject F-1-to-H-1B change-of-status petition filed inside the United States. It would not apply to genuinely cap-exempt petitions. The employer-petitioner, not the student beneficiary, would pay it. This remains only a proposed rule and no fee is currently being collected.
DHS filed the notice of proposed rulemaking for public inspection on August 24, 2026, scheduled for Federal Register publication on August 25, 2026, with a 30-day comment period. The proposed text at 8 CFR 106.2(a)(3)(xii) reads: "The following additional fee is required for all H-1B cap-subject petitions, including those eligible for the advanced degree exemption under section 214(g)(5)(C) of the Act: $103,265."
The US advanced-degree allocation is included. The master's-cap petitions that are exempt from the 65,000 limit are named in the proposed text as covered by the fee, so it is wrong to read INA secs. 214(g)(5) and (7) as blanket exclusions — 214(g)(5)(C) is expressly in scope.
Genuinely cap-exempt petitions are generally excluded — employment at an institution of higher education or a related affiliated nonprofit, and at nonprofit research or government research organisations.
Petitions not subject to the annual cap at all are not covered, including extensions and employer changes for a beneficiary already counted against the cap.
It is separate from, and additive to, the vacated $100,000 proclamation payment. The proposal says a petitioner subject to both would pay both.
The scope above is what the proposal says today; a final rule could still change it. What is not in doubt is that nothing is payable now.
The two older figures are widely misreported, and neither belongs in your budget either.
The 2025 $100,000 proclamation payment is not being collected
- Vacated by a federal court on June 8, 2026 and NOT currently collected — the First Circuit declined to reinstate it on July 24, 2026 while the government's appeal proceeds.
- It never applied to students already in the US changing status from F-1 to H-1B.
- Where it did apply, it was an employer obligation — not a cost billed to the worker.
The $100,000 OPT fee is not a rule
- DISCUSSED/REPORTED ONLY — not formally proposed. No Federal Register proposal establishing a $100,000 OPT fee has been published, no such amount appears in regulation, and nobody is currently being charged.
- It surfaced as press reporting on July 30, 2026 describing an internal discussion at DHS — not a rulemaking document.
- Treat any page presenting it as a cost you will pay as out of date.
What all three could affect — if the proclamation payment is reinstated on appeal, if the OPT figure ever becomes an actual proposed rule, or if the $103,265 fee is finalised in something like its proposed form — is employer willingness to sponsor. That reaches you through the job market, not through your bank account, and it is a reason to keep a cushion rather than to pre-pay a fee that does not exist. The US degree ROI calculator models them exactly that way: as sponsorship shocks, not bills.
If you want to influence the newest one rather than just absorb it, the comment period is the mechanism — comments go to regulations.gov under DHS Docket No. USCIS-2026-0298 and close 30 days after publication.
Decision 8 — The date on your I-94 is about to matter more than it ever has
The rule that has governed F-1 admission for decades is scheduled to be replaced, and it halves the grace period every page on this subject quotes — including this one.
Status of the fixed-admission rule
FINAL RULE, not yet in effect — takes effect September 15, 2026 and is being challenged in federal court, with a hearing set for September 9, 2026.
The change: instead of being admitted for "duration of status", an F-1 student would be admitted for the length of the programme on the I-20, capped at four years, followed by a 30-day grace period rather than 60 days. Overstaying a dated I-94 without a timely extension carries a consequence duration of status does not.
Students already admitted for duration of status generally keep the 60-day grace period until they travel abroad and re-enter, or file an extension of stay. There is transition relief specifically for practical training: a student in the US and maintaining status on the effective date who timely files Form I-765 for OPT or STEM OPT on or before March 18, 2027 generally avoids a separate Form I-539.
Three things to do about it
- Do not treat any grace-period figure — on any site, including this one — as yours. Read your most recent I-94 and confirm with your DSO.
- Plan international travel deliberately. Re-entry after the effective date is what converts a duration-of-status admission into a date-certain one.
- If you are filing OPT or STEM OPT, the March 18, 2027 window is the date to organise around. Filing after it generally pulls an I-539 into the process, which is where delayed start dates and unpaid gaps come from.
The decision table
Find your row. Do the first column before the second.
| If this is you | Do this first | Then this |
|---|---|---|
| Starting OPT with nothing saved | Bank one month of expenses, fast — the 7.65% you are not paying in FICA gets you most of the way | Take the full employer match, then keep saving to 90 days of burn |
| On OPT with a match available | Contribute to the full match from your first eligible paycheck | Build the cushion to 90 days, then open a Roth IRA |
| Selected in the lottery, waiting for October | Confirm with your DSO that cap-gap covers you to April 1 | Set aside the coming 7.65% FICA increase before it hits your paycheck |
| Not selected, STEM extension available | File the extension — it buys 24 months and two more lottery attempts | Check your remaining unemployment days: the 150 is aggregate, not a reset |
| Not selected, no STEM extension | Count grace-period days from your OPT end date, not from today | Make every money decision portable: IRA rollover, no new US lock-ups, no lease past your dates |
| Just started H-1B | Re-run your take-home with 7.65% removed and set the budget to that | Raise the 401(k) to at least the match, then decide Roth vs traditional |
| Laid off on H-1B | Remember the 60 days are unpaid and capped by your petition's validity | Do not cash out the 401(k) to bridge it — that is exactly what the cushion was for. See H-1B layoff options |
What not to do
The five most expensive mistakes on this transition
- Buying permanent life insurance or an indexed universal life policy because it was pitched as a tax-free retirement plan. It is not a substitute for an employer match or an emergency fund, and the surrender charges bite hardest in exactly the early years when a visa holder's plans are most likely to change. Read term vs IUL before signing anything.
- Buying a house during OPT. Transaction costs need years to amortise. Your authorisation to be here is measured in months.
- Cashing out the 401(k) to fund a move. The 10% penalty and the withholding together take a bite you will spend years replacing.
- Letting lifestyle absorb the entire student-to-professional jump. The raise is the only chance you get to set a savings rate before your spending catches up to it.
- Sending most of it to India before the US cushion is full. The money is much harder to bring back than to send, and the cushion is what keeps you off the 401(k) in a bad month.
Frequently asked questions
Do I pay Social Security and Medicare tax on OPT?
Usually not. A nonresident alien in F-1 status doing USCIS-authorised work incident to that status — including CPT, post-completion OPT and the STEM extension — is generally exempt from FICA. The exemption turns on being a nonresident alien, and days of US presence generally stop being excluded from the Substantial Presence Test after 5 calendar years in relevant F, J, M or Q status, with prior years in those statuses counting toward the limit.
When exactly does FICA start?
Generally with your first H-1B paycheck, because H-1B is not among the statuses the IRS exempts. It can start earlier if your exempt-individual period ends while you are still on OPT and you become a resident alien under the Substantial Presence Test. It is 7.65% of gross once it starts, and there is no phase-in.
FICA was withheld from my OPT paycheck by mistake. Can I get it back?
Yes. Ask your employer for a payroll refund first, because that is much faster. If they cannot help, file Form 843 with Form 8316, attaching your W-2, the visa page of your passport, your I-20 with the OPT endorsement and your EAD. Refund claims have a limitations period, so do not leave old years sitting.
Should I contribute to a 401(k) on OPT if I might leave the US?
Contributing at least to the full employer match is usually the stronger position. If the match is vested, it will often outweigh the additional 10% early-distribution penalty, though income tax and applicable withholding still apply and the result depends on vesting, the match formula, your tax status and any available penalty exceptions. You are also not obliged to withdraw early: the vested balance may generally be left in the plan or rolled into an IRA, subject to the plan's rules, the receiving custodian's policy for non-US residents, and tax rules in both countries.
Can I open a Roth IRA as a nonresident alien on OPT?
Yes, if you have taxable compensation. There is no citizenship or residency requirement, but IRS Publication 590-A excludes from "compensation" any amounts you exclude from income — so wages excluded under a treaty article cannot support a contribution. India's Article 21(2) is a deduction rather than an exclusion, so it does not create that problem.
How big should my emergency fund be on a visa?
Size it to the clocks rather than to a generic number of months: 90 days of unemployment on post-completion OPT, 150 days in total with the STEM extension, and a 60-day unpaid grace period at either end of the transition. At a $3,500 monthly burn that is roughly $10,500 and $17,500 respectively.
Does the STEM extension reset my unemployment days to 150?
No — and this is the single most common error in OPT content. The 150 days are an aggregate across post-completion OPT and the STEM extension. Use 40 days on initial OPT and you have 110 left, not 150.
Does cap-gap still end on October 1?
No. Since the H-1B modernization final rule took effect on January 17, 2025, the cap-gap extension runs to April 1 of the fiscal year the H-1B is requested for, or the validity start date of the approved petition if that comes first. Plenty of pages still quote the old date, so check the publication date on anything you read about this.
What happens if my cap-gap petition is denied or withdrawn?
The cap-gap extension ends, so cap-gap work authorisation stops. Permission to remain usually does not end on the same day: USCIS states that a student in that position generally has the standard 60-day grace period to depart, measured from notification of the denial, rejection, revocation or withdrawal, or from the date the extension of status terminated or the program end date, whichever is later. The exception matters — that grace period does not apply where the change-of-status request was denied, or the petition revoked, because of a status violation, misrepresentation or fraud, and in those cases USCIS expects immediate departure.
Is there a new $103,265 H-1B fee I have to pay?
No — nothing is payable now, and it would not be billed to you in any case. On August 24, 2026 DHS filed a notice of proposed rulemaking proposing a $103,265 fee, scheduled for Federal Register publication on August 25, 2026 with a 30-day comment period. As currently proposed, the fee would apply to all cap-subject H-1B petitions, including a cap-subject F-1-to-H-1B change-of-status petition filed inside the United States, and including petitions under the US advanced-degree allocation. It would not apply to genuinely cap-exempt petitions such as those from institutions of higher education, affiliated nonprofits, and nonprofit or government research organisations, nor to petitions outside the annual cap such as extensions and employer changes for a beneficiary already counted. The employer-petitioner, not the student beneficiary, would pay it. This remains only a proposed rule and no fee is currently being collected, though a final rule could change the scope. It is separate from the vacated $100,000 proclamation payment.
Will the $100,000 H-1B proclamation fee come out of my salary?
No, and as of August 24, 2026 nobody is paying it. Vacated by a federal court on June 8, 2026 and NOT currently collected — the First Circuit declined to reinstate it on July 24, 2026 while the government's appeal proceeds. That 2025 proclamation payment also never applied to students already in the US changing status from F-1 to H-1B, and where it did apply it fell on the employer rather than the worker. Note that it is a different instrument from the $103,265 fee proposed on August 24, 2026, and the proposal says a petitioner subject to both would pay both.
What happens to my taxes in the year I move from F-1 to H-1B?
It depends on the day the Substantial Presence Test says your residency begins, so there is no single answer. If you do not meet the test that year you generally remain a nonresident for the whole year. If residency begins mid-year the return is dual-status, and a dual-status filer generally cannot claim the standard deduction or file jointly unless a valid election allows them to be treated as a full-year resident. If you are a resident for the full year you generally file Form 1040 and may qualify for the ordinary resident standard deduction. The India-treaty deduction no longer applies after the qualifying student period, but that does not by itself mean a bigger bill — a full-year resident may claim the ordinary standard deduction instead.
The bottom line
Your first professional paycheck is the fork in the road, but the fork is narrower than the generic advice suggests. One month of cash so a bad week cannot reach your retirement account. The full employer match, because no other decision on this page returns 50% on day one. Cash out to 90 days of burn — that figure is the initial post-completion OPT unemployment limit, not the F-1 departure period and not the H-1B grace period, which are separate 60-day clocks with their own rules. Then long-term investing, in that order.
And get the two dates right that most people get wrong: the day 7.65% starts leaving your paycheck, and April 1 of the relevant fiscal year — the day cap-gap now runs to, six months later than most of the internet still says. Then check your own residency day count rather than assuming the switch year costs you money; for many people it does not.
Run your own dates before you budget
The OPT calculator maps every deadline and your remaining unemployment days. The F-1 tax calculator answers the residency and FICA questions for your specific year count.
Official sources
- IRS — Student FICA exception / nonresident alien FICA
- IRS — Aliens employed in the US: Social Security taxes
- IRS — Exempt individual: students
- IRS — Substantial Presence Test
- IRS — Taxation of dual-status individuals
- IRS — US-India income tax treaty documents
- IRS — Form 843 (refund of erroneously withheld tax)
- IRS Publication 590-A — Contributions to Individual Retirement Arrangements
- IRS Publication 519 — US Tax Guide for Aliens
- DHS Study in the States — F-1 cap-gap extension
- DHS Study in the States — Recent H-1B rule extends the F-1 cap-gap extension
- USCIS — Extension of Post-Completion OPT and F-1 Status for Eligible Students under the H-1B Cap-Gap Regulations
- Federal Register — Modernizing H-1B Requirements and Providing Flexibility in the F-1 Program (final rule, effective January 17, 2025)
- Federal Register — Fee for Certain H-1B Petitions (DHS notice of proposed rulemaking, RIN 1615-AD20, DHS Docket No. USCIS-2026-0298)
- USCIS — H-1B electronic registration process (registration fee)
- 8 CFR 214.1(l)(2) — 60-day grace period on cessation of employment
- DHS Study in the States — SEVIS unemployment counter
- DHS Study in the States — STEM OPT extension
- USCIS Policy Manual, Vol. 2, Part F, Ch. 5 — Practical Training
- Federal Register — Establishing a Fixed Time Period of Admission (final rule, July 17, 2026)
Deepak Middha, CA, Series 65Founder & Author
Deepak has experience in cross-border finance, tax-aware planning, and immigrant money decisions. View full profile →
Educational content, not personalized tax, legal, immigration, or financial advice. Rules, fees, and processing times change — always verify with the official source before acting. See our full disclaimer.
