Tuition reduction is the key factor determining tax burden of graduate students under the Tax Cuts and Job Act

Background: The proposed Tax Cuts and Jobs Act (H.R.1) has stirred significant public debate on the future of American economics. While supporters of the plan have championed it as a necessity for economic revitalization, detractors have pointed out areas of serious concern, particularly for low- and middle-income Americans. One particularly alarming facet of the plan is the radical change to education finance programs and taxation of students in higher education. Methods: By analyzing actual income and tuition of a public and a private university student, as well as the ‘average’ graduate student, we investigated the effect of both the House and Senate versions of H.R. 1 on taxation of students of various family structures. Results: Our findings indicate that taxable tuition would be the greatest contributor to graduate student tax burden across all four categories of filing status. However, when tuition reduction is upheld or a student is on sustaining fees rather than full tuition, graduate students would realize decreases in taxation. Conclusions: Overall, we conclude that removal of tuition reduction would result in enormous tax burdens for graduate students and their families and that these effects are dependent not only on the status of the student in their degree program but also on their tuition and stipend, and therefore the institution they attend.