University of Illinois System

Taxability of Graduate Level Tuition & Service Fee Waivers 

Graduate level tuition and service fee waivers that are a benefit of employment are considered taxable income by the IRS (I.R.C. § 127).  As a result, graduate assistants, pre-professional graduate assistants, and regular employees receiving tuition waivers as a benefit of employment may see a reduction in your take-home pay for the months of October, November and possibly December of the fall semester, and March, April and possibly May of the spring semester. 

There are some exclusions for Teaching and Research Assistants (e.g., I.R.C. § 117) that we cover in the video below.

Fellowships and scholarships are not considered employment by the IRS (Topic No 421 Scholarships, Fellowship Grants, and Other Grants). As a result, the University does not withhold on any stipends or waivers from fellowships if the individual is not subject to tax treaties with another country, and the responsibility of determining, calculating, and paying taxes (if applicable) is on the individual.

Anticipating the Impact on Your Pay

University Payroll & Benefits' Customer Service team can calculate the anticipated reduction in your take home pay if you contact them directly. University Payroll & Benefits oversees all withholding processes for employees, so if there are problems with your paycheck or withholding, you can visit their office, email or call them to get answers.

Contact University Payroll & Benefits

Planning for Potential Loss of Income

The Student Money Management Center offers resources for budgeting, student loans and other personal finance topics, including: