As you may be aware, the House of Representatives have proposed a tax reform bill. Within the bill are three changes that would affect graduate students across the country. The proposed bill would allow tuition waivers for graduate students to be included as taxable income. In addition, the lowest tax bracket (which nearly all of our graduate students would fall under) would be increased from 10% to 12%, and the personal exemption (which currently reduces a single student's taxable income by $4050) is being eliminated.
To illustrate the impacts of these changes, I did some simple calculations based on stipend and tuition rates at the University of New Hampshire's Department of Biological Sciences. But certainly, these principles apply to students in graduate programs across programs across the nation.
For the current 2017/2018 academic year, a year's worth of graduate tuition ranges between $13,840 (NH resident) and $27,130 (out-of-state). Within the Department of Biological Sciences, the minimum stipend rates for graduate students range between $17,640 per year (MSc student) and $20,060 (PhD student at candidacy). But if this bill passes, a MSc student would be responsible for paying taxes on $31,480/yr (in-state) to $44,770/yr (out of state) of salary (even though they never see the money associated with the cost of tuition).
The consequences could be catastrophic, particularly for those without financial stability. Currently, a MSc student (using the standard deduction) could expect to pay $724/yr in federal income taxes (an effective tax rate of 4.1%). Even with the increase in standard deduction, this same MSc student could expect to pay $2337 (in state) to $3932 (out of state) in annual federal income taxes without an increase in salary, resulting in an effective tax rate of 13.2% (in state) to 22.3% (out of state). Please note that under current law I (in the first year of being a tenure-track assistant professor) will pay an effective tax rate of ~16.4% without itemizing deductions. It is unconscionable that I could have the same, or even less, tax burden than my own students.
If this concerns you as much as it does me, please contact your representatives to ensure that our elected officials know the harm this bill would cause to graduate students, universities, and our communities. To my fellow academics, please contact your Provosts to press them to do the same.
Want to estimate how your (or your students') tax burdens might change? There is a great Shiny App for exactly this purpose.