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Education Tax Topics

Are Scholarships and Grants Taxable?

If you’ve received a scholarship, grant, or fellowship, congratulations! Here’s how these sources of income will affect your taxes.

Is my scholarship taxable income?

A scholarship is tax-free only if: 

  • You are a candidate for a degree at an eligible educational institution 
  • You use the scholarship to pay qualified educational expenses 

What are qualified education expenses?

To remain tax-free, the income from scholarships must be used for these qualified education expenses: 

  • Tuition and fees required to enroll at or attend an eligible educational institution
  • Course-related expenses, such as fees, books, supplies and equipment that are required for the courses at the eligible educational institution
  • These items must be required of all students in the course of instruction

What are taxable expenses?

A fellowship stipend for your room and board, childcare, or transportation expenses are generally taxable. Any amounts paid for you to work, such as student teaching, are also considered taxable. Finally, any amounts leftover after covering tuition, fees, books, supplies, and equipment required for the program are taxable.

Tip/Help

A fellowship stipend for your room and board, childcare, or transportation expenses are generally taxable.

Are grants taxable?

A grant is tax-free only if: 

  • You are a candidate for a degree at an eligible educational institution, and
  • You use the grant to pay qualified educational expenses, and
  • The grant isn’t a payment for time spent researching, testing, teaching, etc.

Are fellowships taxable?

A fellowship is tax-free only if: 

  • You are a candidate for a degree at an eligible educational institution,
  • You use the awarded money to pay qualified educational expenses, and

The fellowship isn’t a payment for time spent researching, testing, teaching, etc.

 

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