As part of the $858 billion tax package passed by Congress and signed by President Obama on December 17, employers and employees will continue to receive a tax break on their tuition expenses. As part of the "Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010," Section 127 of the IRS Code-employer-provided education assistance-has been extended for two years through December 31, 2012.
Section 127 enables an employee to exclude from his or her income up to $5,250 per year in employer-provided tuition assistance for any type of educational course, undergraduate or graduate. Employers who use this benefit can deduct these costs as a business expense when determining their income tax liability.
ASTD is a member of The Coalition to Preserve Employer Provided Education Assistance (CPEPEA), a group that advocated for the permanent extension of Section 127. "In 2007, almost half of Section 127 beneficiaries were graduate students, and 45 percent majored in business and the 'STEM' subjects (science, technology, engineering, and math)-areas that are critical to developing a competitive workforce," says Tony Bingham, ASTD president and CEO.
Section 127 was originally established in 1978 as a five-year provision to give officials time to study it. It has been extended eight times since then-in some cases retroactively after it had expired-and most recently in 2001 for ten years.
More information about Section 127 may be found at www.cpepea.com.