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Exclusion for Employer-provided Educational Assistance

Current Law:
Employer-paid educational expenses are excludable from gross income and wages of employees up to $5,250 annually for employer-provided educational assistance. The exclusion applies if the educational assistance payment is pursuant to a written plan of the employer, does not discriminate in favor of highly compensated employees, and if payments made on behalf of more than five percent owners do not exceed five percent of total payments under the plan. The exclusion does not apply to graduate courses beginning after June 30, 1996.

New Law:
The exclusion is extended to employer-provided educational assistance for graduate education programs, and the exclusion as applied to both undergraduate and graduate education is now permanent. This provision is effective with respect to courses beginning after December 31, 2001. (page 9)

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