What Is the Federal Allowance For Tuition Reimbursement? | Learn.org

The U.S. government provides a federal allowance for tuition reimbursement, allowing employees to receive financial assistance for job-related education and training. This program helps workers improve their skills, enhance career opportunities, and offset the cost of tuition for approved courses and degree programs.

What Is the Federal Allowance For Tuition Reimbursement?

The federal limit for tuition reimbursement is typically set at $5,250 per year. Under IRS guidelines, employers, including federal agencies, can provide up to this amount to employees for tuition reimbursement without it being taxable income.

Any amount exceeding $5,250 in a year may be subject to taxes unless certain exceptions apply, such as if the education is directly related to the employee's job and necessary for maintaining or improving their skills. This limit helps employees pursue educational opportunities without significant tax implications.

Is Employer Tuition Reimbursement Tax Deductible?

Yes, employer tuition reimbursement can be tax-deductible under certain conditions. The IRS allows employers to deduct education expenses provided to employees as part of an educational assistance program. This includes up to $5,250 per employee yearly, which can be excluded from the employee's taxable income.

To qualify as tax-deductible, the program must meet specific IRS requirements, such as a written plan that does not favor highly compensated employees and covers eligible expenses like tuition, fees, and books. The education should be for improving job skills or career advancement, ensuring it benefits both the employer and employee.

What Is the IRS Employee Student Loan Repayment Program?

The IRS Employee Student Loan Repayment Program allows federal agencies, including the IRS, to offer student loan repayment assistance as a recruitment and retention incentive. Under this program, the IRS can contribute up to $10,000 per year toward an employee's federally-backed student loans, with a lifetime maximum of $60,000.

These payments are made directly to the loan servicer and are taxable as income for the employee. In exchange, employees typically commit to at least three years of service with the agency. The program helps attract qualified candidates and retain skilled employees by reducing their student loan burdens.

List of Employers That Offer Tuition Reimbursement

Tuition reimbursement is a widely offered benefit where employers cover part or all of the cost of education for their employees. The goal is to help employees advance their skills and careers while building a more knowledgeable and capable workforce.

Here is a list of 15 notable employers that offer tuition reimbursement programs:

• Amazon: The Career Choice program covers tuition for in-demand courses up to an annual limit.
• Starbucks: Full tuition coverage for online degrees through Arizona State University.
• Walmart: Offers tuition reimbursement through their Live Better U program.
• UPS: Up to $25,000 in lifetime tuition assistance.
• Home Depot: Provides tuition reimbursement for part and full-time employees.
• Target: Offers debt-free education for select programs.
• Chipotle: Provides up to $5,250 annually in tuition reimbursement.
• McDonald's: Archways to Opportunity program offers up to $2,500 yearly.
• Verizon: Up to $8,000 in annual tuition assistance.
• AT&T: Provides tuition reimbursement for eligible employees.
• Boeing: Covers up to $25,000 annually for graduate degrees.
• Bank of America: Offers up to $7,500 annually.
• FedEx: Up to $5,250 annually in tuition reimbursement.
• Deloitte: Provides tuition assistance for eligible degrees, certificates, and courses.
• Anthem, Inc.: Provides up to $5,000 annually for continuing education.

These companies invest in their employees' futures, demonstrating their commitment to professional growth and education.