Status of Qualified Tuition Reduction
December 19, 2017 | BY Yosef Z. Klein
Last week, on December 15th , the Joint Committee on Taxation released a conference report on the Tax Cuts and Jobs Act. The House proposal included the repeal of the “qualified tuition reduction” exclusion from income, however the conference report does NOT include any mention of repealing the “Qualified Tuition Reduction” exclusion from income.
If the Tax Cuts and Jobs Act is enacted in its current version, educational institutions and their employees will continue to benefit from the “Qualified Tuition Reduction” exclusion from income.
What is the “Qualified Tuition Reduction?
A qualified tuition reduction is the amount of any reduction in tuition provided to an employee of an educational organization for the education, at that or another educational organization, of the employee, the employee’s spouse and dependent children, and certain retired and disabled employees and surviving spouses. The exclusion is generally available only for tuition below the graduate level.
• The amount of any qualified tuition reduction for an employee of an educational institution is excludable from gross income.
• In order to qualify for the exclusion, the tuition reduction must be provided to an employee of a qualified educational organization.
• Also, the tuition reduction must be for education at the elementary, secondary, or undergraduate levels, either at the employer educational institution or at another educational institution.
Many educational institutions offer this benefit to their staff. The loss of this income exclusion would negatively affect many educational institutions and their employees. Continuing to exclude the “Qualified Tuition Reduction” from income is valuable to the education of our youth.