Feenstra, Davis Honor American Education Week by Introducing Legislation to Strengthen Education Assistance Programs for Workers and Employers
Today, U.S. Reps. Randy Feenstra (R-IA) and Danny K. Davis (D-IL) introduced the Upskilling and Retraining Assistance Act and the Upward Mobility Enhancement Act to modernize the tax code to help lower the cost of education for workers and help employers recruit and train a skilled workforce.
“To strengthen our workforce and grow our economy, we must connect education with concrete skills that prepare young people for careers in a wide array of industries and support continuing education and skills development for folks who have been in the workforce for decades. We can achieve these goals by making it easier for businesses to invest in their employees’ education through a simpler, more efficient tax code,” said Rep. Feenstra. “I’m proud to work with my colleague on the House Ways and Means Committee – Rep. Danny Davis – to modernize our educational tax incentives and ensure that America continues to produce the best workforce in the world.”
“We should use all the tools in our toolbox to lower the cost of education and help employers recruit and train a skilled workforce,” said Rep. Davis. “I am proud to join with Rep. Randy Feenstra and Senators Maggie Hassan, Todd Young, Catherine Cortez-Masto, and Tim Scott to modernize the educational tax assistance program that we know gives workers important educational opportunities while helping employers attract and develop a skilled workforce. Workers win. Employers win. America wins.”
A recent report from the National Federation of Independent Business found that, of the 59% of business owners who reported hiring or trying to hire in August 2023, 92% of them found few or no qualified applicants for the positions they were trying to fill. Recognizing the role that employers play in education and retraining opportunities, the tax code allows employers to pay up to $5,250 for educational programs for their workers without it counting toward the workers’ taxable income or employment taxes (such as Social Security and Medicare). These programs result in increased worker enrollment, higher retention rates, and a more skilled workforce. This tax provision helps lower the cost of education for workers and helps employers recruit and retain workers.
Unfortunately, this tax provision currently is far below the cost of most higher education programs and does not cover many costs of tools and technology. These two bills would modernize the education assistance tax provision to ensure that workers and their employers can fully benefit. Expanding the education assistance program is a win-win. It gives employers an important tool to hire and retrain workers, and it helps workers develop the skills to expand employment opportunities. Both bills would make two important changes to broaden the use of educational program assistance: more than double the tax exclusion from $5,250 to $12,000 and expand the tax exclusion to cover the expenses from more types of education and training programs. The Upskilling and Retraining Act would adjust these provisions for two years to address the current workforce shortage, and the Upward Mobility Enhancement Act would permanently modernize this education tax assistance program to meet the long-term needs of workers and employers.
Both bills are supported by over one dozen organizations, including: American Council on Education; American Mold Builders Association; Chegg; Forging Industry Association; Guild; HR Policy Association; National Association of College and University Business Officers; National Association of Independent Colleges and Universities; National Association of Professional Employer Organizations; North American Die Casting Association; Precision Machined Products Association; Precision Metalforming Association; Society for Human Resource Management; and the University of Pennsylvania.
“The National Association of Independent Colleges and Universities (NAICU) would like to thank Rep. Feenstra and Rep. Davis for your leadership on important legislation that will more than double the annual tax-free benefit employers can provide employees to assist with tuition or student loan repayment expenses under Sec. 127 of the IRC. We overwhelmingly support the Upward Mobility Enhancement Act and the Upskilling and Retraining Assistance Act that will increase the annual benefit amount from $5,250 to $12,000. This increase is long overdue and is important for working students pursuing their educational goals, and for employees repaying student loans. Expanding Sec. 127 will also help employers attract the best employees and position the U.S. economy to compete globally by building a skilled workforce,” said Karin Johns, Director of Tax Policy for the National Association of Independent Colleges and Universities.
“We applaud Congressman Davis and Congressman Feenstra for their leadership on this important issue. SHRM has long championed policies that allow employers to offer education assistance programs relevant to the modern workforce. The world of work is in a state of transformation, and our reskilling and upskilling programs must keep pace. SHRM fully supports this bipartisan effort as a powerful tool to expand skills training opportunities, and we will do all we can to help move this legislation forward. Congress can send a clear signal that the US government backs American employers and employees by passing this legislation and making these changes permanent,” said Emily M. Dickens, Chief of Staff and Head of Public Affairs of the Society for Human Resource Management.
“HR Policy Association expresses its gratitude to Representatives Feenstra and Davis for their commendable leadership in introducing legislation aimed at enhancing the annual tax-free benefit that employers can offer to assist employees with tuition or student loan repayment expenses under Sec. 127 of the IRC. We endorse the Upward Mobility Enhancement Act and the Upskilling and Retraining Assistance Act, which propose raising the annual benefit amount from $5,250 to $12,000. This overdue increase holds significant importance for working students pursuing their educational aspirations and for employees managing student loan repayments. The expansion of Sec. 127 will bolster working individuals and empower employers to draw in top-tier talent, strategically positioning the U.S. economy to compete globally by fostering the growth of a highly skilled workforce,” said Chatrane Birbal, Vice President of Policy and Government Relations for HR Policy Association.
Legislative text for the Upward Mobility Enhancement Act can be found HERE and legislative text for the Upskilling and Retraining Assistance Act can be found HERE.
