Finance

Qualified Tuition Reduction (§117(d)) Calculator

Find how much of an education employee's tuition waiver is excludable from income.


Qualified Tuition Reduction (§117(d)) Calculator

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Employees of nonprofit educational institutions can receive undergraduate tuition waivers completely tax-free, with no dollar cap at all — a far more generous benefit than most employer education programs.

How it works

An undergraduate-level tuition waiver is fully excludable regardless of amount. A graduate-level waiver is only excludable if the recipient is also a teaching or research assistant for the institution — otherwise the full amount is taxable.

What this does not include

This does not include the separate §127 employer educational assistance exclusion (capped at $5,250/year and available from any employer), which this site’s employer-educational-assistance-exclusion calculator covers — §117(d) is specific to educational institutions waiving their own tuition.

How to use this calculator

  1. Enter the tuition waived, whether it’s graduate-level, and whether the recipient is a teaching/research assistant.

Frequently asked questions

Does this benefit cover spouses and dependents too?

Yes — the exclusion extends to tuition reductions for an employee’s spouse and dependent children, not just the employee themselves.

Why is there no dollar cap for undergraduate tuition?

Congress designed §117(d) specifically to support the traditional practice of colleges and universities offering free or reduced tuition to their own employees’ families as a workforce benefit.

Must an institution offer this benefit to all employees equally?

Yes — if an institution chooses to offer qualified tuition reduction, it generally cannot discriminate in favor of highly compensated employees; the benefit must be available on a nondiscriminatory basis.

Important: This is general information, not financial advice. Figures are estimates, and your lender or provider decides the real numbers. Check with a qualified adviser before acting on them.

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Written by

M. Whitfield

Personal finance writer

M. Whitfield writes the personal finance calculators, covering loans, mortgages, savings, tax and investment maths. The focus is on showing exactly which number goes into a formula and which assumptions a result depends on, so readers can tell when a figure applies to their situation and when it does not. Every finance page states what it does not account for as plainly as what it does.

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A. Whitfield-Reyes

Calculator reviewer — finance

A. Whitfield-Reyes reviews the finance calculators, checking compounding conventions, rate-period alignment, and whether each page is explicit about the costs and tax treatment it leaves out. Financial results are easy to state with false precision, so review focuses on whether the page makes its assumptions visible to a reader who is not looking for them.

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