I.R.C. § 117(a) General Rule —
Gross income does not include any amount received as a qualified scholarship by
an individual who is a candidate for a degree at an educational organization described
in section 170(b)(1)(A)(ii).
I.R.C. § 117(b) Qualified Scholarship —
For purposes of this section—
I.R.C. § 117(b)(1) In General —
The term “qualified scholarship” means any amount received by an individual
as a scholarship or fellowship grant to the extent the individual establishes that,
in accordance with the conditions of the grant, such amount was used for qualified
tuition and related expenses.
I.R.C. § 117(b)(2) Qualified Tuition And Related Expenses —
For purposes of paragraph (1), the term “qualified tuition and related expenses” means—
I.R.C. § 117(b)(2)(A) —
tuition and fees required for the enrollment or attendance of a student at an educational
organization described in section 170(b)(1)(A)(ii), and
I.R.C. § 117(b)(2)(B) —
fees, books, supplies, and equipment required for courses of instruction at such
an educational organization.
I.R.C. § 117(c) Limitation
I.R.C. § 117(c)(1) In General —
Except as provided in paragraph (2), subsections (a) and (d) shall not apply to that portion of any amount received which represents payment
for teaching,
research, or other services by the student required as a condition for receiving
the qualified scholarship or qualified tuition reduction.
I.R.C. § 117(c)(2) Exceptions —
Paragraph (1) shall not apply to any amount received by an individual under—
I.R.C. § 117(c)(2)(A) —
the National Health Service Corps Scholarship Program under section 338A(g)(1)(A)
of the Public Health Service Act,
I.R.C. § 117(c)(2)(B) —
the Armed Forces Health Professions Scholarship and Financial Assistance program
under subchapter I of chapter 105 of title 10, United States Code, or
I.R.C. § 117(c)(2)(C) —
a comprehensive student work-learning-service program
(as defined in section 448(e) of the Higher Education Act of 1965)
operated by a work college (as defined in such section).
I.R.C. § 117(d) Qualified Tuition Reduction
I.R.C. § 117(d)(2) Qualified Tuition Reduction —
For purposes of this subsection, the term “qualified tuition reduction”
means the amount of any reduction in tuition provided to an employee of an organization
described in section 170(b)(1)(A)(ii) for the education (below the graduate level) at such organization (or another organization
described in section 170(b)(1)(A)(ii))
of—
I.R.C. § 117(d)(2)(A) —
such employee, or
I.R.C. § 117(d)(2)(B) —
any person treated as an employee (or whose use is treated as an employee use) under
the rules of section 132(h).
I.R.C. § 117(d)(3) Reduction Must Not Discriminate In Favor Of Highly Compensated, Etc. —
Paragraph (1) shall apply with respect to any qualified tuition reduction provided with respect
to any highly compensated employee only if such reduction is available on substantially
the same terms to each member of a group of employees which is defined under a reasonable
classification set up by the employer which does not discriminate in favor of highly
compensated employees (within the meaning of section 414(q)). For purposes of this
paragraph, the term “highly compensated employee” has the meaning given
such term by section 414(q).
I.R.C. § 117(d)(5) [4] Special Rules For Teaching And Research Assistants —
In the case of the education of an individual who is a graduate student at an educational
organization described in section 170(b)(1)(A)(ii) and who is engaged in teaching or research activities for such organization,
paragraph (2) shall be applied as if it did not contain the phrase “(below the graduate
level)”.
(Aug. 16, 1954, ch. 736, 68A Stat. 38; Sept. 21, 1961,
Pub. L. 87-256, Sec. 110(a), 75 Stat. 535; Oct. 4, 1976, Pub. L. 94-455, title XIX, Sec. 1901(b)(8)(A), (c)(3), 90 Stat. 1794, 1803; Dec. 17, 1980, Pub. L. 96-541, Sec. 5(a)(1), 94 Stat. 3205; July 18, 1984, Pub. L. 98-369, div. A, title V, Sec. 532(a), 98 Stat. 887; Oct. 22, 1986, Pub. L. 99-514, title I, Sec. 123(a), title XI, Sec. 1114(b)(2), 1151(g)(2), 100 Stat. 2112, 2450, 2506;
Nov. 10, 1988, Pub. L. 100-647, title I, Sec. 1011B(a)(31)(B), title IV, Sec. 4001(b)(2), 102 Stat. 3488, 3643; Nov. 8, 1989, Pub. L. 101-140, title II, Sec. 203(a)(1), (2), 103 Stat. 830; Aug. 20, 1996, Pub. L. 104-188, title I, Sec. 1703(n)(14), 110 Stat. 1755; June 7, 2001, Pub. L. 107-16, title IV, Sec. 413(a), 115 Stat. 38; Pub. L. 114-113, Div. Q, title III, Sec. 301.)
BACKGROUND NOTES
AMENDMENTS
2015 - Subsec. (c)(2)(A)-(C). Pub. L. 114-113, Div. Q, Sec. 301(a), amended par. (2) by striking “or” at the end of
subpar. (A), by substituting “, or” for the period at the end of subpar.
(B), and by adding subpar. (C).
2001 - Subsec. (c). Pub. L. 107-16, Sec. 413(a), amended subsec. (c). Before amendment it read as follows:
“(c) Limitation.—"Subsections (a) and (d)
shall not apply to that portion of any amount received which represents payment for
teaching, research, or other services by the student required as a condition for receiving
the qualified scholarship or qualified tuition reduction.”
1996 - Subsec. (d)(2)(B). Pub. L. 104-188, Sec. 1703(n)(14), substituted “section 132(h)” for “section 132(f)”.
1989 - Subsec. (d)(4). Pub. L. 101-140, Sec. 203(a)(2), amended par. (4) to read as if amendments by Pub. L. 100-647, Sec. 1011B(a)(31)(B), had not been enacted, see 1988 Amendment note below.
Pub. L. 101-140, Sec. 203(a)(1), amended subsec. (d) to read as if amendments by Pub. L. 99-514, Sec. 1151(g)(2), which added par. (4), had not been enacted, see 1986 Amendment note below.
1988 - Subsec. (d)(4). Pub. L. 100-647, Sec. 1011B(a)(31)(B), substituted ‘there shall’ for ‘there may’ and ‘who
are’ for ‘who may be’.
Subsec. (d)(5). Pub. L. 100-647, Sec. 4001(b)(2), added par. (5).
1986 - Pub. L. 99-514, Sec. 123(a), in amending section generally, substituted ‘Qualified scholarships’
for ‘Scholarships and fellowship grants’ in section catchline.
Subsec. (a). Pub. L. 99-514, Sec. 123(a), amended subsec. (a) generally. Prior to amendment, subsec. (a) read as follows:
‘In the case of an individual, gross income does not include -
‘(1) any amount received -
‘(A) as a scholarship at an educational organization described in section 170(b)(1)(A)(ii),
or
‘(B) as a fellowship grant, including the value of contributed services and
accommodations; and
‘(2) any amount received to cover expenses for
-
‘(A) travel,
‘(B) research,
‘(C) clerical help, or
‘(D) equipment, which are incident to such a scholarship or to a fellowship
grant, but only to the extent that the amount is so expended by the recipient.’
Subsec. (b). Pub. L. 99-514, Sec. 123(a), in amending subsec. (b) generally, substituted qualified scholarship provision for
former limitations provision, which related in par. (1) to individuals who were candidates
for degrees, and in par. (2) to individuals who were not candidates for degrees, describing
in subpar. (A) conditions for exclusion and in subpar. (B) extent of exclusion, such
detailed provision now covered in subsec. (c).
Subsec. (c). Pub. L. 99-514, Sec. 123(a), in amending subsec. (c) generally, substituted limitation provision for former provision
relating to Federal grants for tuition and related expenses not includable merely
because there was requirement of future service as Federal employee.
Subsec. (d). Pub. L. 99-514, Sec. 123(a), in amending subsec. (d) generally, substituted ‘reduction’ for ‘reductions’
in heading and inserted ‘(within the meaning of section 414(q))’ after
‘highly compensated employees’
in par. (3).
Subsec. (d)(3). Pub. L. 99-514, Sec. 1114(b)(2), struck out ‘officer, owner, or’ after ‘with respect to any’
and ‘officers, owners, or’ after ‘in favor of’ and inserted
at end ‘For purposes of this paragraph, the term ‘highly compensated employee’
has the meaning given such term by section 414(q).'
Subsec. (d)(4). Pub. L. 99-514, Sec. 1151(g)(2), added par. (4).
1984 - Subsec. (d). Pub. L. 98-369 added subsec. (d).
1980 - Subsec. (c). Pub. L. 96-541 added subsec. (c).
1976 - Subsecs. (a)(1)(A),
(b)(1), (2). Pub. L. 94-455, Sec. 1901(b)(8)(A), substituted ‘educational organization described in section 170(b)(1)(A)(ii)’
for ‘educational institution (as defined in section 151(e)(4))’ after
‘scholarship at an’.
Subsec. (b)(2)(A)(iv). Pub. L. 94-455, Sec. 1901(c)(3), struck out ‘a territory’ after ‘or a State’.
Subsec. (b)(2)(B). Pub. L. 94-455, Sec. 1901(b)(8)(A), substituted ‘educational organization described in section 170(b)(1)(A)(ii)’
for ‘educational institution (as defined in section 151(e)(4))’ after
‘degree at an’.
1961 - Subsec. (b)(2)(A). Pub. L. 87-256 included cases where the grantor of the scholarship or fellowship grant is a foreign
government, an international organization, or a binational or multinational educational
and cultural foundation or commission created or continued pursuant to the Mutual
Educational and Cultural Exchange Act of 1961.
EFFECTIVE DATE OF 2015 AMENDMENTS
Amendments by Pub. L. 114-113, Div. Q, Sec. 301(a), effective for amounts received in taxable years beginning after
the enactment of this Act.
EFFECTIVE DATE OF 2001 AMENDMENT
Amendment by section 413(a) of Pub. L. 107-16 effective for amounts received in taxable years beginning after December 31, 2001.
Section 901 (Sunset of Provisions of Act) of Pub. L. 107-16, as amended by Pub. L. 107-358 and Pub. L. 111-312, Sec. 101(a),and struck by Pub. L. 112-240, Sec. 101(a)(1) (effective for taxable, plan, or limitation years beginning after Dec. 31, 2012,
and estates of decedents dying, gifts made, or generation skipping transfers after
Dec. 31, 2012), provided that:
“(a) IN GENERAL.--All provisions of, and amendments made by, this Act shall
not apply--
“(1) to taxable, plan, or limitation years beginning after December 31, 2012,
or
“(2) in the case of title V, to estates of decedents dying, gifts made, or generation
skipping transfers, after December 31, 2012.
“(b) APPLICATION OF CERTAIN LAWS.--The Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 shall be applied
and administered to years, estates, gifts, and transfers described in subsection (a)
as if the provisions and amendments described in subsection (a) had never been enacted.
“(c) EXCEPTION.-Subsection (a) shall not apply to section 803 (relating to no
federal income tax on restitution received by victims of the Nazi regime or their
heirs or estates).”
EFFECTIVE DATE OF 1996 AMENDMENT
Section 1703(o) of Pub. L. 104-188 provides that: “this section shall take effect as if included in the provision
of the Revenue Reconciliation Act of 1993 to which such amendment relates.”
EFFECTIVE DATE OF 1989 AMENDMENT
Amendment by Pub. L. 101-140 effective as if included in section 1151 of Pub. L. 99-514, see section 203(c) of Pub. L. 101-140, set out as a note under section 79 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by section 1011B(a)(31)(B) of Pub. L. 100-647 effective, except as otherwise provided, as if included in the provision of the Tax
Reform Act of 1986, Pub. L. 99-514, to which such amendment relates, see section 1019(a) of Pub. L. 100-647, set out as a note under section 1 of this title.
Section 4001(c) of Pub. L. 100-647 provided that: ‘The amendments made by this section (amending sections 117
and 127 of this title) shall apply to taxable years beginning after December 31, 1987.’
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 123(a) of Pub. L. 99-514 applicable to taxable years beginning after Dec. 31, 1986, but only in the case of
scholarships and fellowships granted after Aug. 16, 1986, see section 151(d) of Pub. L. 99-514, set out as a note under section 1 of this title.
Amendment by section 1114(b)(2) of Pub. L. 99-514 applicable to years beginning after Dec. 31, 1987, see section 1114(c)(2) of Pub. L. 99-514, set out as a note under section 414 of this title.
Amendment by section 1151(g)(2) of Pub. L. 99-514 applicable, with certain qualifications and exceptions, to years beginning after
Dec. 31, 1988, see section 1151(k) of Pub. L. 99-514, as amended, set out as a note under section 79 of this title.
EFFECTIVE DATE OF 1984 AMENDMENTS
Section 532(b) of Pub. L. 98-369, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘The amendment made by this section
(amending this section) shall apply to qualified tuition reductions
(as defined in section 117(d)(2) of the Internal Revenue Code of 1986
(formerly I.R.C. 1954))
for education furnished after June 30, 1985, in taxable years ending after such date.'
Provisions of subsec. (d) treated as in effect on and after Jan. 1, 1984, in case
of education described in section 127(c)(8) of this title, see section 1(g)(5) of
Pub. L. 98-611, set out as a note under section 127 of this title.
EFFECTIVE DATE OF 1980 AMENDMENT
Section 5(a)(2) of Pub. L. 96-541 provided: ‘The amendment made by paragraph
(1) (amending this section) shall apply to taxable years beginning after December
31, 1980.’
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by Pub. L. 94-455 applicable with respect to taxable years beginning after Dec. 31, 1976, see section
1901(d) of Pub. L. 94-455, set out as a note under section 2 of this title.
EFFECTIVE DATE OF 1961 AMENDMENT
Section 110(h)(1) of Pub. L. 87-256 provided that: ‘The amendments made by subsections (a), (b), and (c) of this
section (amending this section and sections 871 and 872 of this title) shall apply
to taxable years beginning after December 31, 1961.’
NONENFORCEMENT OF AMENDMENT MADE BY SECTION 1151 OF PUB. L. 99-514 FOR FISCAL YEAR 1990
No monies appropriated by Pub. L. 101-136 to be used to implement or enforce section 1151 of Pub. L. 99-514 or the amendments made by such section, see section 528 of Pub. L. 101-136, set out as a note under section 89 of this title.
APPLICABILITY OF CERTAIN AMENDMENTS BY PUBLIC LAW 99-514 IN RELATION TO TREATY OBLIGATIONS
OF UNITED STATES
For nonapplication of amendment by section 123(a)
of Pub. L. 99-514 to the extent application of such amendment would be contrary to any treaty obligation
of the United States in effect on Oct. 22, 1986, with provision that for such purposes
any amendment by title I of Pub. L. 100-647 be treated as if it had been included in the provision of Pub. L. 99-514 to which such amendment relates, see section 1012(aa)(3), (4) of Pub. L. 100-647, set out as a note under section 861 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of
title XI (Sec. 1101-1147 and 1171-1177)
or title XVIII (Sec. 1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such plan amendment shall not be required to be
made before the first plan year beginning on or after Jan. 1, 1989, see section 1140
of Pub. L. 99-514, as amended, set out as a note under section 401 of this title.
ISSUANCE OF FINAL REGULATIONS
Secretary of the Treasury or his delegate to issue before Feb. 1, 1988, final regulations
to carry out amendments made by section 1114 of Pub. L. 99-514, see section 1141 of Pub. L. 99-514, set out as a note under section 401 of this title.
TRANSITIONAL RULES FOR TREATMENT OF CERTAIN REDUCTIONS IN TUITION
Section 1853(f) of Pub. L. 99-514 provided that:
‘(1) A tuition reduction plan shall be treated as meeting the requirements of
section 117(d)(3) of the Internal Revenue Code of 1954 (now 1986) if -
‘(A) such plan would have met the requirements of such section (as amended by
this section but without regard to the lack of evidence that benefits under such plan
were the subject of good faith bargaining) on the day on which eligibility to participate
in the plan was closed,
‘(B) at all times thereafter, the tuition reductions available under such plan
are available on substantially the same terms to all employees eligible to participate
in such plan, and
‘(C) the eligibility to participate in such plan closed on June 30, 1972, June
30, 1974, or December 31, 1975.
‘(2) For purposes of applying section 117(d)(3)
of the Internal Revenue Code of 1954 (now 1986) to all tuition reduction plans of an employer with at least 1
such plan described in paragraph
(1) of this subsection, there shall be excluded from consideration employees not included
in the plan who are included in a unit of employees covered by an agreement that the
Secretary of the Treasury or his delegate finds to be a collective bargaining agreement
between employee representatives and 1 or more employers, if, with respect to plans
other than plans described in paragraph (1), there is evidence that such benefits
were the subject of good faith bargaining.
‘(3) Any reduction in tuition provided with respect to a full-time course of
education furnished at the graduate level before July 1, 1988, shall not be included
in gross income if -
‘(A) such reduction would not be included in gross income under the Internal
Revenue Service regulations in effect on the date of the enactment of the Tax Reform
Act of 1984
(July 18, 1984), and
‘(B) such reduction is provided with respect to a student who was accepted for
admission to such course of education before July 1, 1984, and began such course of
education before June 30, 1985.’
NATIONAL RESEARCH SERVICE AWARDS
Pub. L. 95-600, title I, Sec. 161(b), Nov. 6, 1978, 92 Stat. 2810, as amended by Pub. L. 96-167, Sec. 9(b), Dec. 29, 1979, 93 Stat. 1278; Pub. L. 96-541, Sec. 5(b), Dec. 17, 1980, 94 Stat. 3206; Pub. L. 97-248, title II, Sec. 285, Sept. 3, 1982, 96 Stat. 569; Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
‘(1) General rule. - Any amount paid to, or on behalf of, an individual from
appropriated funds as a national research service award under section 472 of the Public
Health Service Act (section 289l-1 of Title 42, The Public Health and Welfare) shall
be treated as a scholarship or fellowship grant under section 117 of the Internal Revenue Code of 1986 (formerly I.R.C. 1954).
‘(2) Effective date. - The provisions of subsection
(b) shall apply to awards made during calendar years 1974 through 1983.’
SCHOLARSHIP PROGRAMS FOR MEMBERS OF THE UNIFORMED SERVICES
Pub. L. 93-483, Sec. 4, Oct. 26, 1974, 88 Stat. 1458, as amended Pub. L. 94-455, title XXI, Sec. 2130, Oct. 4, 1976, 90 Stat. 1922; Pub. L. 95-171, Sec. 5, Nov. 12, 1977, 91 Stat. 1355; Pub. L. 95-600, title I, Sec. 161(a), Nov. 6, 1978, 92 Stat. 2810; Pub. L. 95-615, title I, Sec. 6, Nov. 8, 1978, 92 Stat. 3098; Pub. L. 96-167, Sec. 9(a), Dec. 29, 1979, 93 Stat. 1278; Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
‘(a) In General. - Any amount received from appropriated funds as a scholarship,
including the value of contributed services and accommodations, by a member of a uniformed
service who is receiving training under the Armed Forces Health Professions Scholarship
Program
(or any other program determined by the Secretary of the Treasury or his delegate
to have substantially similar objectives) from an educational institution (as defined
in section 151(e)(4) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954)) (see section 170(b)(1)(A)(ii) of this title)
shall be treated as a scholarship under section 117 of such Code (this section), whether
that member is receiving training while on active duty or in an off-duty or inactive
status, and without regard to whether a period of active duty is required of the member
as a condition of receiving those payments.
‘(b) Definition of Uniformed Services. - For purposes of this section, the term
‘uniformed service’ has the meaning given it by section 101(3) of title
37, United States Code.
‘(c) Effective Date. - The provisions of this section shall apply with respect
to amounts received during calendar years 1973, 1974, and 1975, and, in the case of
a member of a uniformed service receiving training after 1975 and before 1981 in programs
described in subsection (a), with respect to amounts received after 1975 and before
1985.’
(Section 6 of Pub. L. 95-615, which reenacted Sec. 4(c) of Pub. L. 93-483 without change, to cease to have effect on the day after Nov. 8, 1978, see section
210(a)
of Pub. L. 95-615, set out as a note under section 61 of this title.)
