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Employer Tuition Assistance Exemption on GOP Tax-Reform Chopping Block

The proposed tax plan would eliminate a tax exclusion for employer-based tuition assistance.

More than 400 members of the Society for Human Resource Management went to Capitol Hill on Nov. 16 to push changes in the employer-sponsored benefits portion of the Republican tax-reform plan. Currently, employers can provide up to $5,250 of tax-free tuition assistance to employees every year. That tax exclusion could be cut if the plan passes. The legislation was passed in the House of Representatives on Nov. 16 in a 227-205 vote. It will go to the Senate next, where Republicans have a two-seat majority.

The skills gap is affecting businesses across the country, and many turn to community colleges and universities to help train talent. According to one estimate, 65 percent of all jobs will require an associate or bachelor’s degree or other form of education beyond high school by 2020. Cutting the tax exclusion could mean fewer employers are able to offer tuition assistance to employees.

“Providing tuition reimbursement allows many employees to pursue health care careers and, in turn, enables them to purchase homes, provide for their families and give back to their communities through their work,” Lori Hoekstra, HR manager for compensation and benefits at Riverside Medical Center in Kankakee, Illinois, said in a SHRM press release.

According to the statement, members of the 285,000-member HR advocacy association are concerned with other tax exclusions proposed in both the U.S. House and Senate versions of the tax plan as well. Other tax exclusions would include adoption assistance, moving expenses, transportation, meals, biking subsidies and employee achievement awards.

The Association for Talent Development also supports keeping the tax exemption for employer tuition assistance, according to Kristen Fyfe-Mills, the associate director of communications at ATD. ATD is part of a collection of organizations called the Coalition to Preserve Employer Provided Education Assistance.

While in Washington, SHRM members will also be advocating for the Workflex in the 21st Century Act, which would provide employee benefits including expanded paid leave for full- and part-time workers and flexible work options.

Ave Rio is an associate editor at Chief Learning Officer magazine. Comment below or email editor@CLOmedia.com.

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