Staff Tax Implications of Taking Classes

The University of Louisville offers a generous tuition remission package for eligible employees and their dependents. Visit the the Human Resources Educational Benefits page for more detailed in formation.

While it is not U of L’s role to act as a tax advisor, we feel it is important that you understand how current tax law impacts your tuition remission benefits.

Graduate and professional tuition remission is a limited taxable benefit. Section 127 of the Internal Revenue Code presently exempts only $5,250.00 per calendar year. For those employees who exceed this allocation during the spring semester, the respective social security, Medicare, state, and Louisville Metro taxes will be collected through the January, February, March, and April payrolls. Taxes applicable to the summer term will be collected through the May, June, July, and August payrolls. Fall semester taxes will be collected through the September, October, November, and December payrolls. In all instances, the taxable value will be added to federal taxable income; however, no federal taxes will be withheld throughout the calendar tax year.

In practical terms what this means is that staff who are taking masters or professional level classes will be taxed on the value of their tuition remission over $5,250 per calendar year. This can be misleading - because a staff member who starts in August will not reach this threshold until roughly two or three semesters of tuition benefits have been paid.  Please plan accordingly to avoid paycheck shock. Please contact the Student Affairs Unit Business Manager for assistance if needed.