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I came across an analysis of the tax reform bill in which its author suggests that tuition paid by a school or scholarship will be treated as taxable income under the new rules, and wasn't under the old rules.

If that’s correct, then a graduate student who receives a $20,000 stipend for being a teaching assistant, plus a $40,000 tuition waiver, will have to pay taxes on an income of $60,000.

It seems to me that all the change is doing is saying that if you did not actually pay the tuition yourself, you cannot deduct the tuition from your income, which, from my understanding, can only be reduced by $2,500 under the current rules.

  • Should this be on law.se instead? – user2932 Nov 7 '17 at 14:59
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    Unfortunately so many questions really fit into multiple (or no) category. This is about proposed changes in a law, so law might work, but it's about taxes, so money also might work. But at the same time, discussions about new legislation are political. It would be nice if there were a way to include a post in multiple stackexchange topics. – Daniel Goldman Nov 7 '17 at 16:08
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    It is my understanding that we don't comment on money.SE on pending legislation as it tends to change rapidly and will generally have to be interpreted by the executive branch and courts. That being said a quick search "stipend tax" on news.google brought up a number of solid articles on the subject. – rhaskett Nov 9 '17 at 5:30
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    @rhaskett there's nothing that makes discussing pending legislation completely off-topic. The problem with this question is that even if there were a reference to the wording in the legislation, we really only comment on IRS guidance. Once the IRS goes through its own process we can talk to a question as specific as this one, but otherwise, we can only speak about general financial principles. I think a more general question about pending legislation would be on topic. – NL - Apologize to Monica Nov 9 '17 at 15:29
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    @NathanL That seems reasonable. – rhaskett Nov 9 '17 at 18:12
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The article you sited has been highly edited (though it isn't clear if the edits occurred before or after your question was posted). The general consensus is: No, scholarships would be not be considered as taxable income. The terminology in question is specifically "tuition waivers" which might be, but most people agree that it probably won't apply there either, and even if it did, schools could simply change the terminology of their "tuition waiver" to be a "scholarship" instead and then the rule would be circumvented.

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