Do All Student Workers Have to Pay Taxes?

A student’s tax obligations depend on several factors, including how much they earn and their type of employment. Federal law has specific provisions for students that can reduce or eliminate certain tax burdens. These rules distinguish between federal income tax and payroll taxes for Social Security and Medicare. The nature of the employer—whether it’s the educational institution or a private company—also plays a part in the tax equation.

Federal Income Tax Obligations for Students

A student worker’s duty to pay federal income tax is determined by their total income for the year. The Internal Revenue Service (IRS) allows every taxpayer to reduce their taxable income by a standard deduction, and for dependents, which includes most students, this deduction has special rules.

For the 2025 tax year, the standard deduction for a dependent is limited to the greater of $1,350 or their earned income plus $450. This amount cannot be more than the regular standard deduction for single individuals, which is $15,000. For example, if a student earns $8,000 from a part-time job, their standard deduction would be $8,450, and they would not owe any federal income tax.

If a student’s total income falls below their allowable standard deduction, they have no federal income tax liability. When starting a job, students complete a Form W-4, Employee’s Withholding Certificate, which instructs the employer on how much federal income tax to withhold from each paycheck.

Social Security and Medicare Tax Rules

Social Security and Medicare taxes, collectively known as FICA taxes, are another component of a student’s tax liability. These taxes fund federal retirement and health insurance programs and are withheld from an employee’s paycheck at a combined rate of 7.65%. An exception exists for certain student workers, which can exempt them from these taxes.

This “student FICA exemption” applies under specific IRS conditions. The primary requirement is that the student must be employed by the school, college, or university where they are also enrolled. The work is considered secondary to the student’s main purpose of pursuing a course of study.

The exemption does not extend to work performed for a private company, even if the job is on campus. If a student works for a campus bookstore or coffee shop operated by a third-party vendor, FICA taxes will be withheld. The exemption also requires the student to be enrolled at least half-time, a status defined by the educational institution. When these conditions are met, the student’s pay is not subject to FICA tax withholding.

Requirements for Filing a Tax Return

Whether a student worker is required to file a federal tax return is a separate question from whether they owe tax. The IRS has specific income thresholds that trigger a filing requirement for dependents, which differ for income earned from a job versus unearned income from investments.

For the 2025 tax year, a dependent student must file a tax return if their earned income exceeds $15,000. A filing requirement also exists if their unearned income is more than $1,350. If a student has both earned and unearned income, they must file if their gross income is more than the larger of $1,350 or their earned income plus $450.

Even if a student’s income is below these thresholds, filing a tax return is often a good idea. If any federal income tax was withheld from their paychecks, the only way to get that money back is to file a tax return and claim a refund.

Impact on Parent’s Tax Return

A student’s employment status can affect their parents’ ability to claim the student as a dependent. A working student does not automatically disqualify them from being claimed. The IRS uses a series of tests to determine who qualifies as a “Qualifying Child” dependent, including the support test.

The support test requires that the child did not provide more than half of their own financial support for the year. If a student’s earnings are used for discretionary spending while the parents pay for major expenses like tuition, housing, and food, the parents still meet the support test.

Maintaining the student’s dependent status allows the parents to claim tax benefits, such as the American Opportunity Tax Credit or the Lifetime Learning Credit, which can reduce their tax liability. These education credits are generally only available to the person who claims the student as a dependent.