Tax Information for Tuition Remission

What Tuition Remission Benefits are Taxable?

The IRS does not require taxation of tuition remission benefits for undergraduate courses, unless the spouse or child is not claimed as a dependent on the employees’ tax return.

As of January 1, 2002, tuition remission benefits for employees for graduate level courses will no longer be taxed unless the amount remitted exceeds $5,250.00.

If the remission does exceed the $5,250 maximum, the employee will be taxed on the amount above the maximum threshold, unless the program is either required as a condition of employment, or would maintain or improve the skills for the current position AND the course(s) will not qualify for the minimum educational requirements of the position AND the course(s) will not qualify the employee for a new trade or business.

If the graduate level courses meet the above non-taxable conditions, please select the appropriate taxation option when you submit your tuition remission request online. If you select the graduate level course tax wavier option, this will be routed to your department for approval. Tuition remission will not be processed until your request has been approved by your department.

Tuition remission for eligible spouses and dependents of employees hired prior to January 1, 1990 will continue to be taxed for courses taken at the graduate level. The amount to be taxed will be added to the employee’s paycheck over set pay periods and taxes will then be deducted. To determine what Tuition remission would be taxable, view Tuition Remission – Tax Chart