Employee Tuition Reimbursement

The IRS has certain limits on the amount that an employer can deduct for employee education expenses. The limit for tax year 2023 has not been announced yet. For tax year 2022 the limit is $5,250 per employee per year.

This means that an employer can deduct up to $5,250 per employee per year for the cost of tuition, books, and other necessary expenses such as travel and lodging, as long as the education is job-related and serves a bona fide business purpose. Note, that anything above the limit will be taxable to the student employee and reportable on W2.

It’s important to note that the employer’s deduction is limited to the amount of the employee’s qualified education expenses that exceeds 2% of the employee’s adjusted gross income.

Please note that this information is based on the current tax laws, and it is subject to change by the IRS. We recommend checking with your tax professional to confirm the tax implications and deductions that are available for your specific situation.