| Most Ph.D. students receive a tuition waiver that's considered part of their compensation. Example, my Ph.D. was paid for primarily through an NSF grant that my advisor was awarded. An engineering Ph.D. student at my university costs the P.I. a bit more than $100k per year -- $25k stipend for living expenses, $40k for tuition, and the rest goes to travel and university overhead. I paid federal and state income tax on the $25k (not FICA), and the $40k for tuition was reported as tax-exempt income on my W2. Remove the tax exempt status on that tuition money, and my taxable income more than doubles without any increase in my ability to pay. It looks like the effective tax rate would be ~45% of the stipend, and that's not counting FICA or state tax burden [1]. Who is going to do a Ph.D. in the US if this change is enacted? This would seriously damage the workforce development pipeline. Edit: I didn't realize the difference in the standard deduction, which isn't accounted for in the ADP estimate. It still works out to about 32% effective tax rate, which is still a significant addition to the opportunity cost of a 5-year Ph.D. [0]: https://www.insidehighered.com/news/2017/11/07/grad-students... [1]: https://www.adp.com/tools-and-resources/calculators-and-tool... |