Tuition Reimbursement Tax Considerations
Tuition reimbursement provides a tax benefit for employers. According to the IRS’s Fringe Benefits Guide (2020), employers can offer employees $5,250 of educational assistance tax-free each year.
Employees can also deduct this amount as tax-free income that is being used for educational purposes. If you receive tuition reimbursement in excess of the tax-free amount defined by the IRS each year, however, it’s important to note that this money will be considered taxable income.