Representatives Danny K. Davis (D-IL) and Randy Feenstra (R-IA) joined in introducing two legislative measures to increase tax preferences for employer-provided education benefits, the Upward Mobility Act (H.R. 6402) and the Upskilling and Retraining Assistance Act (H.R. 6401). Companion legislation (S. 3296) to the Upskilling and Retraining bill was also introduced in the Senate by Senators Maggie Hassan (D-NH), Tim Scott (R-SC), Todd Young (R-IN) and Catherine Cortez-Masto (D-NV).
Why it matters: Based on member interest, HR Policy Association expressed its support for these legislative initiatives, commending the efforts to improve education assistance benefits. Many member companies of the Association provide employees education assistance benefits, recognizing the pivotal role of education in shaping career paths.
These bills aim to increase the annual tax-preferred benefits provided by employers under Sec. 127 of the Internal Revenue Code.
- The Upward Mobility Act proposes to permanently increase the annual tax-free benefit amount from $5,250 to $12,000 for undergraduate course work, indexed for inflation. The increase would be available for student loan repayments as well.
- The Upskilling and Retraining Act would increase the annual tax-free benefit amount to $12,000 for graduate and undergraduate course work, and student loan repayment, but only for two years.
Outlook: Bipartisan support for both proposals, coupled with strong interest from lawmakers and the Biden administration in supporting investments in U.S. talent, makes it plausible that one of these bills (depending on the Joint Committee on Taxation’s cost estimate) will be considered during this Congress.