[ The following is not tax advice. ] Stipends are generally considered "awards" and not "wages", so Social Security and Medicare taxes are not withheld. There'

[ The following is not tax advice. ] Stipends are generally considered "awards" and not "wages", so Social Security and Medicare taxes are not withheld. There's no free lunch, of course, because each quarter that those taxes are not withheld are quarters that don't accrue the "credits" needed to qualify for Social Security benefits. This could be an issue for someone who, for example, became permanently disabled at a young age. Most people, of course, will work enough years after graduate school that they will qualify for Social Security benefits, but it is something to consider. I think it's standard at this point for universities to not withhold any tax from stipends (or the stipend portion of a disbursement to a graduate student if they are paid from multiple sources). Of course, income is income, whether it's "earned income" or not: so it's not like there isn't a tax liability just because the university doesn't withhold tax. Note that all this is even more complicated for foreign nationals, for whom some combination of state and federal taxes may actually be withheld depending on the specific tax treaty that applies, the visa status of the student and current IRS policy.