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ATD Blog

IRS Code 127, Needs Congressional Attention Before the Year Ends


Tue Apr 13 2010


In 1978, Congress passed the Revenue Act; and as part of that Act, the employer-provided edcuational assistance was created. Prior to 1978, only specific "job-related" education was excluded from gross taxable income. So, what does the code do for you and your organization?

Section 127 of the IRS code gives employers these opportunities:


1. Allows employers to exclude from employees wages up to $5250 per year for payment or reimburshement of tuition, fees, book and other supplies. This also includes certain undergraduate and graduate level eduction. Employees who receive these benefits can exclude up to $5250 for those benefits from their taxable income.

2. It also allows employers to apply employer provided job and non-job related courses of instruction for their employees, including the costs of books, supplies and equipment.

3. Employers who use this benefit can deduct these costs as a business expense in determining their income tax liability.

Each year thousands of employees use this benefit to pursue higher education opportunities that develop and expand their skills to stay competive in today's marketplace.

Congress needs to take action; the provision had been extended 10 times and is due to expire on December 31 of this year.


ASTD has been a very strong supporter on Section 127 and will continue to reach out to Congress to act. Please speak to your member of Congress about this issue and how important it is in ensuring a competitive workforce.


The Department of Labor's Employment and Training Administration, (ETA) announces $90 Million in National Emergency Grants to States. Please take a look at this link for more information. If you serve on a State or Local workforce board, please share this with your staff:


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