Student Workers and FICA Deductions

Internal Revenue Service (IRS) rules exempt students from the Federal Insurance Contributions Act (FICA) deductions for Social Security and Medicare if certain criteria apply.

In general, Texas education entity employees are subject to deductions and contributions to Teacher Retirement System (TRS) and Medicare. Employees not eligible for TRS membership (e.g., substitute teachers) are subject to deductions for an alternative FICA plan (e.g., 457 plan). Student workers are not subject to the same payroll deductions as other employees.                                                                                 

Individuals employed by an entity with a Section 218 Agreement opting into Social Security will have an additional deduction.

Section 218 Agreements

Texas school districts and community colleges are not subject to mandatory participation in Social Security because they participate in a public retirement system. Individual entities may elect to participate in Social Security through an agreement with the State of Texas under Section 218 of the Social Security Act (known as a “Section 218 Agreement”).

Participation in an agreement is determined by a majority vote of eligible employees. If an entity enters into a Section 218 Agreement, it is bound by that agreement and cannot subsequently opt out of the Social Security system. Moreover, the entity cannot opt out of TRS, which means an entity that enters into a Section 218 Agreement must participate in both TRS and the Social Security system. Because of the additional cost, the majority of Texas schools and colleges do not participate in Social Security.

Additional information is available online in the Employee Retirement System (ERS) Section 218 FAQ.

Student Worker Exemptions

Exemptions to the required FICA or alternative plan deductions may apply to students working in a public school, college, or university who are enrolled and regularly attending classes. If the entity doesn’t have a Section 218 Agreement opting into Social Security that covers students, students are exempt from FICA and a FICA alternative plan.

If the entity has a Section 218 Agreement covering students, the students would be subject to the withholdings. This information can be found in the IRS Publication 15 (Circular E, Employer’s Tax Guide 2024).

Districts with questions about Section 218 Agreements or who need a copy of their Section 218 Agreement should contact James Sawyer, the State Social Security Administrator for Texas, at TXSSP@ers.texas.gov.

Information about Social Security can be found in the HR Services Resource Library best practices topics Social Security in Public Schools and Social Security in Community Colleges (member login required).