To Do: Expand Benefits for Employer-Provided Tuition Assistance
Recommendation
Congress should expand Section 127 tax benefits for employer-provided tuition assistance.
Details
Section 127 of the federal tax code allows employers to provide employees up to $5,250 per year in tuition assistance; the employer deducts the cost of the benefit but the employee doesn’t have to report it as income. While it’s an important benefit, Congress has not increased the eligible amount since 1996. Congress should increase Section 127 to at least $8,700 (per the rate of inflation since 1996) and index the amount to the annual rate of inflation going forward. Expanding the Section 127 benefit could help address this challenge, especially considering U.S. corporate investment in workforce training (including for digital skills) as a share of GDP fell by 30 percent from 1999 to 2015.
Keep reading:
▪ Stephen Ezell, “Assessing the State of Digital Skills in the U.S. Economy” (ITIF, November 2021), https://itif.org/publications/2021/11/29/assessing-state-digital-skills-us-economy/.
