Are there any tax consequences of participating in the Employee Tuition Assistance Plan?
The University of Texas at Arlington Employee Tuition Assistance Plan is intended to comply with the tax provisions of IRC Sections 127 and 117(d). Under Section 117(d), undergraduate tuition reduction provided to the employee, the employee’s spouse or dependents as defined under IRC Section 132(h) is excluded in full from gross income. Graduate tuition assistance for the employee is also excludable from gross income, but only to the maximum of $5,250 annually. These exclusions apply as long as the benefit does not discriminate in favor of highly compensated employees. Graduate tuition assistance for spouses remains taxable as no exclusion is provided under either Section 117(d) or Section 127.
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