H1B visa taxes: Complete filing guide for nonimmigrant workers (2026)
H1B visa holders typically qualify as US resident aliens for tax purposes after passing the substantial presence test. That means H1B visa tax usually includes federal income tax at 10–37% progressive rates, plus Social Security at 6.2% and Medicare at 1.45%, along with state taxes.
The filing deadline is April 15, 2026, for the 2025 tax year, with an automatic 6-month extension to October 15, 2026.
This guide covers:
- H1B tax basics step by step – residency status,
- H1B taxation rules,
- Form 1040 vs. Form 1040-NR, 2025 tax brackets,
- Payroll withholding and the OPT transition.
It also flags when H1B tax filing gets tricky, such as foreign income and foreign tax credit carryover (Form 1116).
H1B tax quick reference 2026
These H1B tax facts are the essentials for the 2026 filing season (for 2025 income). Use them as a quick check for 2025 H1B tax rates, payroll withholding, and the H1B filing deadline. Amounts shown follow IRS and SSA published guidance.
| Category | Details |
|---|---|
| Tax year | January 1 – December 31, 2025 |
| Filing deadline | April 15, 2026 (extension to Oct 15) |
| Residency test | Substantial presence test (at least 31 days in the current year and 183 days over a 3-year weighted formula: all current-year days + 1/3 of prior-year days + 1/6 of the second prior year) |
| Federal tax | 10% to 37% (progressive brackets) |
| Social Security | 6.2% (wage base $176,100 for 2025) |
| Medicare | 1.45% (on Medicare wages; no wage base limit) + 0.9% over $200K |
| Standard deduction | $15,750 single / $31,500 married filing jointly (2025 tax year) |
| FICA exemption | None (unlike F-1/OPT students) |
| Common forms | 1040/1040NR, W-2, state returns |
| Active H1B visas | 580,000 (USCIS estimate 583,420) |
What types of temporary work visas exist in the US?
The US offers 20+ non-immigrant work visa categories. Most common: H-1B (specialty occupations 580K active), H-2A (agricultural), H-2B (non-agricultural), L-1 (intracompany transfers), O-1 (extraordinary ability), P-1 (athletes/entertainers). Each has specific tax treatment.
- H-1B: Specialty occupations (tech, finance, healthcare, engineering)
- H-2A: Seasonal agricultural workers
- H-2B: Seasonal non-agricultural workers (hospitality, construction)
- L-1: Intracompany transferees (managers, specialized knowledge)
- O-1: Extraordinary ability in sciences, arts, business, education, athletics
- P-1: Internationally recognized athletes and entertainers
To see the full list of temporary (nonimmigrant) worker classifications, please visit the US Citizenship and Immigration Services website.
Are H1B visa holders resident or nonresident aliens for tax purposes?
Most H-1B holders become resident aliens after meeting the substantial presence test, but some can still be treated as nonresidents if they qualify for an exception (for example, the closer connection rules).
A resident alien H1B filer reports worldwide income, uses the same rates as US citizens, can claim the standard deduction, and pays Social Security and Medicare. First-year arrivals may be H1B nonresident alien depending on entry date and prior US presence.
Substantial presence test for H1B workers
The substantial presence formula is a weighted day count across three calendar years. Most H1B workers count days from arrival, so crossing 183 happens fast. The IRS applies this test year by year, which is why the first H1B filing year often feels different.
Formula:
- Count all days in 2025 × 1
- Count 1/3 of the days in 2024
- Count 1/6 of the days in 2023
- Total ≥ 183 days = resident alien
Example:
Sarah received an H1B starting April 1, 2025 (first time in US)
- 2025: 275 days (Apr–Dec) × 1 = 275
- 2024: 0 days × 1/3 = 0
- 2023: 0 days × 1/6 = 0
Total: 275 days → RESIDENT ALIEN for 2025 tax purposes. Unlike F-1/J-1, H1B days count from arrival.
Resident vs nonresident alien tax comparison
The biggest difference is the income scope. Is H1B a resident alien status? Usually, yes – and that switches you to worldwide reporting and the standard deduction on Form 1040. A nonresident alien return is narrower, often uses Form 1040-NR, and usually blocks key benefits.
| Tax aspect | Resident alien | Nonresident alien |
|---|---|---|
| Income taxed | Worldwide | US-source only |
| Tax rates | 10–37% progressive | 10–37% progressive |
| Standard deduction | $15,000 (2025) | Not allowed (typical rule) |
| Filing form | Form 1040 | Form 1040-NR |
| FICA taxes | Required (7.65%) | Required (7.65%) |
| Child Tax Credit | $2,000 per child (rules apply) | Not eligible (typical rule) |
| Filing status | Single/MFJ/HOH | Single/MFJ (limited) |
NOTE! 90%+ of H1B holders are resident aliens.
Main advantage: $14,600 standard deduction saves $1,500–$3,500 in taxes annually. Both resident and nonresident H1B pay FICA taxes.
What are H1B visa tax rates and brackets for the 2025 tax year?
H1B tax rate uses federal progressive brackets from 10% to 37% on taxable income after the standard deduction. Many workers earning $70K–$120K land around a 12%–18% effective federal tax rate, plus 7.65% FICA taxes and state income tax that can run 0%–13.3%, depending on the state.
Please make sure that your address is correct on the W-4 form. Otherwise, you might be paying the wrong local tax.
2025 federal income tax brackets
These 2025 tax brackets are the IRS single-filer schedule for tax year 2025. They drive the marginal H1B tax percentage, not your full paycheck rate. Using the table keeps H1B taxation conversations grounded in the numbers that actually apply on the return.
2025 tax brackets (single filers)
| Taxable income | Tax rate | Tax owed |
|---|---|---|
| $0–$11,925 | 10% | 10% of income |
| $11,926–$48,475 | 12% | $1,192.50 + 12% over $11,925 |
| $48,476–$103,350 | 22% | $5,578.50 + 22% over $48,475 |
| $103,351–$197,300 | 24% | $17,651 + 24% over $103,350 |
| $197,301–$250,525 | 32% | $40,199 + 32% over $197,300 |
| $250,526–$626,350 | 35% | $57,231 + 35% over $250,525 |
| $626,351+ | 37% | $188,769.75 + 37% over $626,350 |
Married filing jointly: brackets roughly double (example: 10% bracket up to $23,850).
Real H1B tax calculation example:
A software engineer earns $95,000 in 2025.
- Gross income: $95,000
- Standard deduction: –$15,000
- Taxable income: $80,000
- Federal income tax: about $12,500 (around 13% effective)
- Social Security H1B: $5,890 (6.2%)
- Medicare: $1,378 (1.45%)
- Total federal taxes: about $19,800, before state
Social Security and Medicare (FICA) taxes
H-1B FICA is straightforward – payroll taxes come out of each paycheck. There is no visa-based opt-out for H-1B, which is why taxes often feel higher after switching from F-1 student status (some F-1/J-1 nonresident students can be exempt from FICA in certain situations).
- Social Security – 6.2% on the first $176,100 of wages in 2025
- Medicare – 1.45% on all wages (no limit)
- Additional Medicare – 0.9% applies above $200,000 (single/most filers), $250,000 (married filing jointly), $125,000 (married filing separately) – employers must withhold the extra 0.9% once wages paid exceed $200,000 in a calendar year
- Employer match – employers pay 6.2% Social Security (up to the wage base) plus 1.45% Medicare separately – they do not match the Additional Medicare tax
Please see the IRS Social Security and Medicare withholding rates.
What's the tax difference between OPT and H1B?
Main tax difference: F-1 OPT students are exempt from FICA taxes (Social Security 6.2% + Medicare 1.45% = 7.65% total) for up to 5 years after graduation. H1B workers pay FICA from their first paycheck. Both pay the same federal income tax rates, but OPT may be a nonresident alien (no standard deduction).
NOTE! F-1 students who are in the US for less than 5 calendar years are generally treated as nonresident aliens and are typically exempt from Social Security and Medicare (FICA) taxes on authorized work; once a worker changes to H-1B, that student's FICA exemption no longer applies, and employers must withhold FICA starting on the effective date of the H-1B status.
| Tax component | OPT (F-1 student) | H1B worker | Annual difference ($80K salary) |
|---|---|---|---|
| FICA taxes | Exempt (often 5 yrs) | Required | +$6,120 |
| Federal income tax | 10–37% | 10–37% | Same brackets |
| Standard deduction | Often not eligible | Eligible (resident rules) | Varies |
| Residency status | Nonresident (first 5 yrs) | Usually resident | Affects credits |
| Tax form | 1040-NR or 1040 | 1040 | Different forms |
| Tax treaty benefits | Often available | Limited (savings clause) | Varies |
OPT students become resident aliens after 5 calendar years in the US under student exempt individual rules.
NOTE! When switching from OPT to H1B mid-year, FICA taxes begin from the H1B start date. In a dual-status year, you generally can’t take the standard deduction (you may itemize allowable deductions instead).
Consult a tax advisor for the optimal filing method.
How do I file H1B taxes in 2026?
Most H1B holders file Form 1040 H1B as resident aliens by April 15. An automatic 6-month extension to October 15 is available using Form 4868, but payment is still due by the filing deadline.
Gather your W-2, report income, claim the standard deduction, and subtract withholding. E-file recommended for faster refunds (typically 21 days vs 6+ weeks for paper).
Step-by-step filing process
H1B tax filing is mostly a clean W-2 process, but the first year can be the exception. The flow is:
- confirm residency,
- choose the right form,
- gather documents,
- calculate tax,
- then file and pay.
This is also where foreign income and H1B taxation rules can quietly pull in Form 1116.
Step 1: Confirm residency status: Apply the substantial presence test. Most H1B → resident alien → Form 1040. First-year arrivals may need 1040-NR.
Step 2: Employers must furnish Form W-2 by the required due date (for 2025 Forms W-2, that date is February 2, 2026).
Step 3: Calculate and file: Report wages, interest, and dividends. Claim H1B standard deduction ($15,750 single) or itemize. SALT is capped at $40,000. Most filers take the standard deduction because it’s simple and valuable.
Step 4: Submit and pay or receive a refund: E-file by April 15. Extension is fine, but the tax due is still April 15. Direct deposit is the fastest.
Common H1B tax deductions and credits
H1B deductions tend to be the simple, high-impact ones – standard deduction, retirement contributions, and family credits for eligible resident filers.
A resident alien return can also claim the foreign tax credit on Form 1116, and unused amounts can create carryovers, which matters for expats with foreign investment income.
- Standard deduction: $15,750 single / $31,500 married filing jointly (2025)
- Child Tax Credit: up to $2,000 per child under 17 (resident rules apply)
- Student loan interest: up to $2,500 deduction (rules apply)
- 401(k) contributions: pre-tax, reduces taxable income (plan rules apply)
- IRA contributions: limits depend on age and coverage (rules apply)
- State taxes paid: SALT deduction limit is $40,000 ($20,000 if married filing separately), subject to a MAGI-based reduction, but not reduced below $10,000 ($5,000 if MFS).
What state and local taxes do H1B workers pay?
H1B state taxes apply in most places – 41 states levy a broad-based income tax, with rates that can reach 13.3%. States without income tax are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Some cities charge H1B local taxes, too.
State taxes:
Most states use 3%–6% flat or progressive rates
- Highest: California (13.3%), New York (10.9%), New Jersey (10.75%)
- File where work and residence occurred
- Multi-state workers may file in multiple states, with credits for taxes paid elsewhere
Local taxes:
- NYC: 3.078%–3.876%
- Philadelphia: 3.8%
- San Francisco: 1.5%
- Detroit: 2.4%
Withholding follows payroll setup, so address errors can cause surprises.
Expert H1B tax filing services
Taxes for Expats has specialized in non-immigrant tax returns for 20+ years, helping over 90,000 expats and visa holders. Our team knows the resident vs nonresident split and the paperwork it triggers – especially dual-status filing, OPT transitions, multi-state returns, and FBAR/FATCA. That’s where H1B tax help saves real time.
A clean filing starts with the green card test and the substantial presence test. From there, the right return type follows – and so do the credits and deductions. For a return that involves H1B tax services plus expat reporting, expat tax filing support keeps the details consistent year to year.
An H1B CPA can also coordinate Form 1116 carryovers when foreign taxes are part of the picture.
FAQ
Yes. H1B holders pay federal income tax (10–37% progressive rates), Social Security tax (6.2%), and Medicare tax (1.45%), plus state or local taxes where applicable. As a resident filer, H1B taxation follows the same bracket structure used for US citizens.
No. But H1B resident alien filers pay the same federal brackets and the same 7.65% employee FICA. Differences usually come from residency timing and which credits are allowed early on.
Yes. H1B Social Security and Medicare withholdings start with the first paycheck. Unlike student status, H1B has no general FICA exemption, so Social Security H1B withholding is normal even in the first year.
The H1B tax rate for federal income tax runs from 10% to 37% under the 2025 tax brackets. Many professionals sit in the 22%–24% marginal range, then add 6.2% Social Security and 1.45% Medicare, plus state tax that can reach 13.3%.
Yes, when withholding exceeds what the return calculates. Common refund drivers include the standard deduction and eligible child credits on a resident return. Filing on time helps – and e-filing with direct deposit often delivers refunds in under 21 days when the return has no issues.
The filing deadline for the 2025 tax year is April 15, 2026. A Form 4868 extension moves the filing date to October 15, but it does not move the payment due date. Paying by April 15 helps avoid penalties and interest.
Most file Form 1040 with a W-2 and a state return. A H1B nonresident alien filer typically uses Form 1040-NR instead. Expats with foreign tax paid may need Form 1116, and carryovers are tracked using the Form 1116 instructions and schedules.
Penalties can stack quickly – failure-to-file is often 5% of unpaid tax per month up to 25%, plus interest. IRS collection tools can include wage garnishment. From a practical standpoint, clean H1B tax filing history also reduces stress when immigration paperwork asks for tax records.
