Education Reimbursement Programs

I am employer looking to add an Education Reimbursement Program for our employees.  I would like some feedback as to:

  1. What limits do employers put on the Program?
  2. Is the limit a lifetime benefit or yearly or some combination?
  3. Do employers front load the expense or make the employee pay for it and if they pass (with a certain grade) the employer reimburses?

Please advise.


Rick Tormo


  • 3 Comments sorted by Votes Date Added
  • The limits we use are the same as what the IRS establishes under IRC
    . Therefore, we provide up to $5,250 per year to employees. There is
    no lifetime cap, but any request must be approved by a supervisor. We reimburse employees after they receive a final grade. 
    The entire cost of the course is reimbursed for an A.  For a B 90
    percent is reimbursed. For a C 80 percent is reimbursed. Below that
    nothing is reimbursed.  This is just what we do.  There are times when we could pay more than that amount and it still would qualify as tax free to the employee. If the education assistance over $5,250 also qualifies as a "working condition fringe
    benefit," we wouldn't have to include it in wages. The IRS says "a working
    condition fringe benefit is a benefit which, had you paid for it, you could
    deduct as an employee business expense."


    Qualifying Work-Related

    You can deduct the costs of qualifying
    work-related education as business expenses. This is education that meets at
    least one of the following two tests.

    • The education is required by your employer or the law to keep your present
      salary, status, or job. The required education must serve a bona fide business
      purpose of your employer.

    • The education maintains or improves skills needed in your present

    However, even if the education meets one or both of the above tests, it is
    not qualifying work-related education if it:

    • Is needed to meet the minimum educational requirements of your present trade
      or business, or

    • Is part of a program of study that will qualify you for a new trade or

    You can deduct the costs of qualifying work-related education as a business
    expense even if the education could lead to a degree.

    Use Figure 12-1 (see next page) as a quick check to see if your education





  • I would say they vary depending on your revenue and the intent of the program.

    The norm for me has been annual allotments of $3-4K for undergrad & $4-6K for graduate.  To avoid headaches, I would not pay for the course until after a satisfactory grade is provided (3.0 out of 4.0 GPA for grad courses).  Keep in mind the IRS tax limit of $5,250.  I would also suggest only approving programs that would directly benefit the employee within some area of your company.  No need to pay for a viticulture degree, if it doesn’t benefit both parties (well, would be good for a company party).  Good luck.

  • What types of expenses do you generally cover?   We cover tuition, books and labs.  There are many fees in addition to tuition that we do not cover.  In some cases, the fees are as much as the tuition, i.e. technology fees, student activity fees, library fees, facility fees, etc....
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