Graduate Tuition Waivers Taxability

Tax Treatment of Graduate Assistant Tuition and Fee Waivers

Beginning with fall 2026 tuition waivers, some graduate assistants may have a portion of their tuition and fee waivers treated as taxable income under federal law.

We recognize that this change may affect graduate assistants’ personal budgets. Missouri State University is providing this information to help affected students understand the change and prepare for its potential effect on their paychecks.

Who is affected

Tax treatment depends on the graduate assistant’s official appointment classification.

Missouri State considers the following appointment classifications exempt under Internal Revenue Code Section 117(d):
- Graduate Teaching Assistant
- Graduate Research Assistant
Tuition and fee waivers provided through these appointments are not subject to the $5,250 limit described below.
Graduate assistants in other appointment classifications are subject to Internal Revenue Code Section 127.

Under Section 127, the first $5,250 in graduate tuition and fee waivers received during a calendar year is excluded from taxable income. Any amount exceeding $5,250 must be added to the graduate assistant’s taxable wages.

A graduate assistant’s tax treatment is based on the official position title recorded by the university. Graduate assistants who are unsure of their appointment classification should contact the Graduate College.

How the $5,250 exclusion works

The $5,250 exclusion applies to the calendar year, Jan. 1 through Dec. 31, rather than the academic year.

Graduate tuition and fee waivers received during the spring, summer and fall terms are combined when determining whether a graduate assistant has exceeded the annual limit.

For example, a nonexempt graduate assistant who receives a $4,500 waiver in the spring and another $4,500 waiver in the fall receives $9,000 in waivers during the calendar year. The first $5,250 is excluded from taxable income. The remaining $3,750 is added to the graduate assistant’s taxable wages.

Only the amount exceeding $5,250 is taxable.

How this affects your paycheck

A tuition and fee waiver is a noncash benefit. You will not receive the taxable portion of the waiver as additional pay.

When your graduate tuition and fee waivers exceed $5,250 during the calendar year:

The amount above $5,250 will be added to your taxable wages.
Applicable federal, state and employment taxes will be calculated on that amount.
The additional taxes will be withheld from your regular paycheck.
Your net pay may be lower during the applicable withholding periods.

The amount withheld will vary based on the taxable portion of your waiver, your regular wages and the elections on your Form W-4.

Withholding schedule

To lessen the effect on any individual paycheck, the university will distribute the withholding across multiple payroll periods.

Tuition waiver term	Paychecks affected
Spring	March, April and May
Summer	June and July
Fall	October, November and December

Paystub and W-2 information

The taxable portion of your tuition and fee waiver will appear on your paystub under “Federally Taxable Benefits” as “Taxable Fee Waiver/Loan.”

Your Form W-2 will include:

The taxable portion of your graduate tuition and fee waiver.
The taxes withheld on that income.

The university will report this information to the IRS as part of the normal W-2 reporting process.

Frequently Asked Questions

Under Internal Revenue Code Section 127, the first $5,250 in graduate educational assistance provided during a calendar year is excluded from taxable income. For nonexempt graduate assistant appointments, waiver amounts exceeding $5,250 must be treated as taxable compensation.
No. Missouri State considers appointments with the official titles of Graduate Teaching Assistant and Graduate Research Assistant exempt under Internal Revenue Code Section 117(d).

Graduate assistants in other appointment classifications are subject to the $5,250 calendar-year exclusion under Section 127.
Your tax treatment is based on the official position title recorded by the university. Contact the Graduate College if you are unsure of your appointment classification.
No. For nonexempt appointments, only the amount exceeding $5,250 during the calendar year is added to taxable wages.
Federal tax law applies the exclusion on a calendar-year basis, Jan. 1 through Dec. 31. This differs from the university’s academic year.

For example, spring and fall waivers received within the same calendar year are combined when determining whether the $5,250 limit has been exceeded.
No. The waiver is a noncash benefit. The taxable portion is added to your wages only for calculating and withholding applicable taxes.
Additional federal, state and employment taxes will be withheld from your regular paycheck. This will reduce your net pay during the applicable withholding periods.

The exact effect will depend on the taxable portion of your waiver, your regular wages and your Form W-4 elections.
Withholding related to fall tuition waivers will be distributed across the October, November and December paychecks.
Review the “Federally Taxable Benefits” section of your paystub and look for “Taxable Fee Waiver/Loan.”
Yes. The taxable portion of the waiver and the related taxes withheld will be included on your Form W-2 and reported to the IRS.
Contact the Graduate College to confirm how a change in your official appointment classification may affect the tax treatment of your tuition and fee waiver.
No. Individual tax circumstances vary, and Missouri State University cannot provide personal tax advice. You may wish to consult a qualified tax adviser about your circumstances.

Questions and assistance

Payroll questions

Contact the Payroll Office with questions about:

Tax withholding
Paystubs
Form W-2 reporting

Email: Payroll@missouristate.edu

Phone: 417-836-6578

Graduate assistantship questions

Contact the Graduate College with questions about:

Appointment classifications
Fee-waiver eligibility
Graduate assistantship records

Email: GradAssistantships@missouristate.edu

Phone: 417-836-5335

Tax-advice disclaimer

This information provides a general explanation of how Missouri State University administers the tax treatment of graduate tuition and fee waivers. It is not intended to provide legal or tax advice.

Tax consequences vary based on individual circumstances. Graduate assistants should consult a qualified tax adviser if they have questions about how taxable tuition and fee waiver benefits may affect their personal tax return.