Fee Waiver as Taxable Income - IMPORTANT

Beginning with the 2019 tax year (January 1, 2019 through December 31, 2019), all graduate/doctoral level courses taken by employees (whether job-related or through Career Development) that exceed the threshold of $5,250 will be considered taxable income. The taxes will be withheld in a lump sum (cannot be split over multiple months) from the employee’s pay warrant following census each semester.  Census is generally mid-September for Fall term, and mid-February for Spring term on our campus.  The withholding amount would likely be deducted on the following pay warrant, but it can take up to 2 months to process.

Full Time Example:

Total value of Fee Waiver (total tuition waived in a calendar year) = $9,098
$9,098 - $5,250 (new threshold) = $3,848 in tuition waived beyond the threshold
Flat Tax Rate = 36.25%
Total taxes withheld from employee’s pay warrant = $1,394.90

Part Time Example:

Total value of Fee Waiver (total tuition waived in a calendar year) = $5,644
$5,644 - $5,250 (new threshold) = $394 in tuition waived beyond the threshold
Flat Tax Rate = 36.25%
Total taxes withheld from employee’s pay warrant = $142.83

The tax withheld for fee waiver is in addition to any other taxes the employee is subject to have withheld from their pay warrant.  The Flat Tax Rate of 36.25% represents 22% federal withholding, 6.6% state withholding, and 7.65% Social Security and Medicare. 

 Please Note:

  • Employees, in consultation with a personal income tax advisor, can evaluate whether their fee waiver qualifies for the “job related” fringe benefit exception to taxation in Internal Revenue Code § 132(d), and if applicable, claim the deduction on an individual income tax return.
  • Undergraduate fees for employees will remain nontaxable pursuant to IRC § 117(d).
  • Graduate/ Doctorate fees for employees will also remain nontaxable if expenses do not exceed $5,250 (in a calendar year) pursuant to IRC § 127.

 The full technical letter is posted here: CSU Technical Letter: Fee Waiver Program

Please email feewaiver@humboldt.edu if you have questions.

Thank you,

Human Resources