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Employer-Provided Educational Assistance

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When Congress returns to Washington after Labor Day, we expect a decision on whether to extend an important tax provision for employees and employers alike. It’s Section 127 of the U.S. tax code, allowing employers to provide employees with up to $5,250 a year in tax-free educational assistance.  If Congress doesn’t act, the provision expires at midnight on Dec. 31.

Fortunately, some members are hoping to beat the clock. Representatives Earl Pomeroy (D-ND) and Sam Johnson (R-TX) have introduced the Employee Educational Assistance Act of 2010 (H.R. 5600), which would make Section 127 permanent.


                        Rep. Pomeroy                Rep. Johnson

Under the terms of Section 127, employees don’t have to report employer-provided tuition reimbursement as personal income, whether the assistance is for any course at the associate, undergraduate or graduate level. The provision has been on the books since 1978, and today nearly a million working Americans take advantage of it every year. The benefit is also an important recruitment and retention tool for employers.

SHRM strongly supports efforts to make Section 127 permanent and co-chairs the Coalition to Preserve Employer Provided Education Assistance, a broad-based collection of groups representing business, labor and education. The coalition recently launched a Web site and released a comprehensive study, “Who Benefits from Section 127?” 

If you have a personal story about how Section 127 has benefited you or your employees, please share it with the coalition by clicking HERE. If you would like to urge your House member to support Section 127, please click HERE


 Next Issue

The next issue of HR Issues Update will be published on Thursday, September 9, 2010.
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