What Untaxed Income Will Be Included On the FAFSA For Need Analysis In 2024-25 and Beyond?

Under the FAFSA Simplification Act, effective with the 2024-25 award year, only the following forms of untaxed income that are included on the federal tax return will be included on the FAFSA and in the federal need analysis/calculation of the student aid index (SAI) for Title IV federal student aid funds:

• Untaxed portions of Individual Retirement Arrangement (IRA, or Individual Retirement Account) distributions (withdrawals);
• Untaxed portions of pension and annuity distributions (withdrawals);
• IRA deductions and payments to self-employed SEP, SIMPLE, and qualified plans;
• Tax-exempt interest; and
• Foreign Earned Income Exclusion.

Effective with 2024-25, the following forms of untaxed income will no longer be collected on the FAFSA and will no longer be included in federal need analysis at all:

• Untaxed payments to tax-deferred pension and retirement saving plans represented by codes D, E, F, G, H, and S in Box 12 of IRS Form W-2 (which are not on the tax return);
• Housing, food, and other living allowances paid to members of the military, clergy, and others;
• Veterans benefits;
• Workman's compensation;
• Other untaxed income not reported elsewhere on the FAFSA, like Black Lung Benefits, Refugee assistance, railroad retirement benefits, Workforce Innovation and Opportunity Act (WIOA) benefits; or
• Cash support received or any money paid on the student’s behalf.

Child support received will be included in assets and not as untaxed income.