The University Record, September 17, 1996

New laws on tuition, minimum wage will affect U-M

From the Payroll Office

Two recent bills signed into law by President Clinton will affect some members of the University community.

One of provisions of the Small Business Job Protection Act of 1996, signed into law on Aug. 20, reinstates the tax exemption for workers whose employers help pay their college tuition. The income tax exemption for employer-aided educational assistance had expired at the end of 1994.

From July 1-May 31, 1997, when the law expires again, the exemptions will continue for undergraduate-level courses only. Graduate-level courses that began July 1 or later are subject to all income and FICA taxes upon reimbursement.

The Payroll Office has made changes in its system and reviewed the payroll files to identify any tuition refunds made earlier this year. 1996 taxable gross income will be adjusted and taxes originally withheld on tuition refunds will be refunded to active employees in their Oct. 25 bi-weekly or Oct. 31 monthly pay.

If an employee had tuition refunds during 1995, the University will provide information on how to handle tuition refunds for that period by a separate letter.

The second change is the minimum wage increase that will change the rate from $4.25 to $4.75 effective Oct. 1 and to $5.15 effective Sept. 1, 1997. Because Oct. 1 is in the middle of a bi-weekly pay period, the University will implement the new rate Sept. 22. Wages for those affected will be automatically increased, and will appear on the Oct. 11 payday.

For information, call the Payroll Office, 764-8250.