The University Record, July 23, 1996

Bill would revive tax exemption on tuition reimbursements for students

The U.S. House of Representatives and Senate have passed different versions of a bill that would allow a tax exemption for workers whose employers help pay their college tuition. The income tax exemption for employer-aided educational assistance expired at the end of 1994.

The tax break, part of a House bill that provides tax benefits for small businesses and a Senate bill that would raise the minimum wage to $5.15 an hour, allows students to exempt from their taxable income up to $5,250 a year for tuition paid for by their employers. Teaching and research assistants are not affected by this bill, as they are covered under a different section of tax code that is under no threat from Congress this year, says Thomas A. Butts, associate vice president for government relations.

Under the House bill, undergraduates could take an exemption for coursework done Jan. 1, 1995-Dec. 31, 1996. Graduate students could only take an exemption on study completed in 1995. The Senate version allows exemptions for undergraduate and graduate students for coursework completed Jan. 1, 1995-Dec. 31, 1997.

Members of the House and Senate are expected to meet this month to work out a compromise between the two bills.