26 USC 127 - Educational assistance programs

U.S Code last checked for updates: Nov 22, 2024

§ 127.

Educational assistance programs

(a)

Exclusion from gross income

(1)

In general

(2)

$5,250 maximum exclusion

(b)

Educational assistance program

(1)

In general

(2)

Eligibility

(3)

Principal shareholders or owners

(4)

Other benefits as an alternative

(5)

No funding required

(6)

Notification of employees

(c)

Definitions; special rules

For purposes of this section—

(1)

Educational assistance

The term “educational assistance” means—

(A)

the payment, by an employer, of expenses incurred by or on behalf of an employee for education of the employee (including, but not limited to, tuition, fees, and similar payments, books, supplies, and equipment),

(B)

in the case of payments made before January 1, 2026, the payment by an employer, whether paid to the employee or to a lender, of principal or interest on any qualified education loan (as defined in section 221(d)(1)) incurred by the employee for education of the employee, and

(C)

the provision, by an employer, of courses of instruction for such employee (including books, supplies, and equipment),

but does not include payment for, or the provision of, tools or supplies which may be retained by the employee after completion of a course of instruction, or meals, lodging, or transportation. The term “educational assistance” also does not include any payment for, or the provision of any benefits with respect to, any course or other education involving sports, games, or hobbies.

(2)

Employee

(3)

Employer

(4)

Attribution rules

(A)

Ownership of stock

(B)

Interest in unincorporated trade or business

(5)

Certain tests not applicable

An educational assistance program shall not be held or considered to fail to meet any requirements of subsection (b) merely because—

(A)

of utilization rates for the different types of educational assistance made available under the program; or

(B)

successful completion, or attaining a particular course grade, is required for or considered in determining reimbursement under the program.

(6)

Relationship to current law

(7)

Disallowance of excluded amounts as credit or deduction

(d)

Cross reference

(Added Pub. L. 95–600, title I, § 164(a), Nov. 6, 1978, 92 Stat. 2811; amended Pub. L. 98–611, § 1(a)–(c), (d)(3)(B), (e), Oct. 31, 1984, 98 Stat. 3176–3178; Pub. L. 99–514, title XI, §§ 1114(b)(4), 1151(c)(4), (g)(3), 1162(a), Oct. 22, 1986, 100 Stat. 2450, 2503, 2507, 2510; Pub. L. 100–647, title I, § 1011B(a)(31)(B), title IV, § 4001(a), (b)(1), Nov. 10, 1988, 102 Stat. 3488, 3643; Pub. L. 101–140, title II, § 203(a)(1), (2), Nov. 8, 1989, 103 Stat. 830; Pub. L. 101–239, title VII, §§ 7101(a)(1), 7814(a), Dec. 19, 1989, 103 Stat. 2304, 2413; Pub. L. 101–508, title XI, § 11403(a), (b), Nov. 5, 1990, 104 Stat. 1388–473; Pub. L. 102–227, title I, § 103(a)(1), Dec. 11, 1991, 105 Stat. 1687; Pub. L. 103–66, title XIII, § 13101(a)(1), Aug. 10, 1993, 107 Stat. 420; Pub. L. 104–188, title I, § 1202(a), (b), Aug. 20, 1996, 110 Stat. 1772, 1773; Pub. L. 105–34, title II, § 221(a), Aug. 5, 1997, 111 Stat. 818; Pub. L. 106–170, title V, § 506(a), Dec. 17, 1999, 113 Stat. 1922; Pub. L. 107–16, title IV, § 411(a), (b), June 7, 2001, 115 Stat. 63; Pub. L. 116–136, div. A, title II, § 2206(a), Mar. 27, 2020, 134 Stat. 346; Pub. L. 116–260, div. EE, title I, § 120(a), Dec. 27, 2020, 134 Stat. 3051.)

cite as: 26 USC 127