The Section 127 Coalition represents a diverse array of organizations, including trade associations, higher education institutions, and private employers. all dedicated to preserving and strengthening employer-provided educational assistance.

Section 127 of the Internal Revenue Code plays a critical role in maintaining U.S. competitiveness and preventing the accumulation of student debt by enabling employers to fund the training, development and education of their employees, without imposing tax burdens on those employees for the education they receive.

Section 127 of the Internal Revenue Code allows employees to receive up to $5,250 per year in educational assistance from their employer for eligible education-related expenses, such as tuition or student loan assistance, as a tax-free benefit. This provision incentivizes employees to take advantage of employer-funded education and loan repayment opportunities without the concern of a tax penalty for doing so. The section enables employers to invest in their employees’ education, simplifies the tax code, prevents the accumulation of student debt, reduces administrative burdens, and encourages upward mobility within a company.

Enacted in 1978 as a pilot program, Section 127 offered tax-free educational assistance to employees. Despite widespread support from business, education, and labor groups, the annual benefit amount remained unchanged for over three decades. During this time, advocates worked diligently to secure the program’s permanence and potential expansion.

In 2012, Section 127 was made permanent under economic stimulus legislation. With this milestone achieved, the Section 127 Coalition shifted its focus to enhancing the program. However, efforts to expand the benefit faced resistance in Congress, as tax reform initiatives prioritized broad rate reductions over individual benefits like Section 127.