Graduate students will be taxed for money they are not making.

Data shows that graduate students make roughly $20,000 a year, while the federal poverty line for a single person is $12,060. The NIH caps stipends of graduate students at $23,844 and has no provision for cost of living adjustment. Now imagine you have to survive on this pittance in biotech and technology hubs such as Bay area, San Diego or Boston.

Graduate students are still students and required to pay tuition, but universities usually waive tuition or it is paid from mentors funds, if available. This waived tuition can exceed the amount of the graduate stipend. So far, the waived tuition was not considered an income for grad students and was not taxed.

However, under the current tax plan proposed by the House Republicans, this changes. Here is an extreme example: MIT waives grad students tuition of ca. $49,000 per year and, in return for teaching and assisting professors pays, them a meager stipend of $30,000 (in Boston!). The new law would consider the waived tuition as an income and add it to the taxable income, a total of $79,000!! Now as absurd as it is, we are talking about taxing a grad student that makes $30,000 (in Boston!) for a total “income” of $79,000!!

Most universities and institutions charge far less than MIT, around $18,000, which is still a considerable amount to pay additional tax on.

Now, the revenue from this new tax to grad students is likely going to be minuscule when compared to total tax revenue to the government. However, its effect on recruitment of new scientific talent and loss of graduate students would be a fatal development for academia and related industries. Ultimately, scientific progress, on which we all depend, will experience the biggest blow. The doctoral education that has been finely balanced and tuned in the last 25 years will experience a serious backlash.

So far this new tax to grad students is proposed only in the House version of the tax bill but not in the Senate version.

Considering the minuscule increase in tax revenue and the significant threat to US leading position in research and development, it is unlikely that the current administration is actively trying to disincentive graduate student.

Let’s hope that this House proposal of the tax bill never becomes reality

More details can be found here, here and here.


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