The GOP tax bill — Say good bye to PhD Students


Taxes.

If you are still a student — you are probably good at ignoring conversations about taxes.
But this one is important. I promise this is not a political post — only the facts.
The new GOP Tax Bill: Tax Cuts and Jobs Act could increase graduate student taxes by $1800-$3000.
Yes you — Student!
If you have been watching the news, you know that the new tax bill Trump has been raving about was marked up by the US House of Representative’s Committee on Ways and Means on Monday.

The committee estimates that the new bill will cut taxes by 114.6 Billion Dollars in 2018 alone and 1.4871 Trillion between 2018–2027.

Yes, 114.6 Billion.
Sounds glorious right!

Well think again. The tax bill does a few interesting things:
For individuals, the tax reform would cut taxes by 47.7 billion

 

For businesses, the tax reform would cut taxes by 125.2 billion

 

For foreigners, the tax reform would increase taxes by 58.1 billion

 

For exempt organizations, taxes would increase by 200 million

As a young married individual, this tax reform sounds great and as a small business owner this tax bill sounds even better! BUT …
But as a graduate student, who works as a teaching/research assistant, my taxes could be increased between $1800–3000 per year, more when you account for my spouses salary.
While the bill takes strides to lower taxes, the writers snuck in a line that is concerning: the line calls for the elimination of nontaxable tuition waivers for all graduate students.

What is a Nontaxable Tuition Waiver?

If you are not aware how graduate education works in the US — graduate students are the work horses and backbone of higher education. The majority of doctoral students receive an annual stipend to support their basic needs. No, we are not talking about a true salary, we are talking about a stipend between $20,000 — $30,000. The national average is around $30,000 a year for a graduate research assistant.
But graduate students are “students”. That means they have tuition as well! Now for most students this tuition could be as high as $50,000! So how do students pay for this when their stipend is only $30,000?
Simple answer: they do not. Most schools cover the cost of this tuition. In essence, graduate students receive a tuition waiver and are not responsible to pay the tuition amount.
This amount, the amount each school pays in honor of the student’s tuition, previously was nontaxable. This new bill may eliminate that. Students would now be taxed on their yearly stipend and the amount of money the schools pays for their tuition.

The Numbers

If a student receives a stipend of $30,000 per year and their school pays their annual tuition of $30,000 a student would now be taxed on a full $60,000 instead of their previous taxable income of $30,000. This difference is enough to bring a single individual from the 12% tax bracket to the 25% tax bracket. But remember, graduate students will not receive any additional income.
In the US today, roughly 145,000 graduate students will be effected by this change.
This change would drastically effect the graduate working population in the US higher education system.
As graduate students, we need to come together to share our concerns with our representatives and push for this bill to be amended.

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Hi! I am a third-year medical student and third-year PhD candidate with a passion for innovation, biomedical research, medical education, healthcare policy, biotechnology, nutrition and a healthy lifestyle. I am a bit of a non-traditional student as you can see from my personal bio. I am a host of medical podcast and the owner of an admission company focused on helping students get into the school of their dreams. I love educating and giving back so if you have questions feel free to email me!

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