Exclusion for employer-provided educational assistance provided to dependents of employees

(a)

In general

Paragraph (1) of section 127(c) of the Internal Revenue Code of 1986 (defining educational assistance) is amended— (1)by inserting or a dependent of the employee after education of the employee in subparagraph (A), and (2)by inserting or dependent after employee in subparagraph (B) and in the material following subparagraph (B). (b)

Separate limitation for dependents

Subsection (a) of section 127 of such Code is amended by adding at the end the following new paragraph:

(3)

Maximum exclusion for assistance furnished to dependents

If, but for this paragraph, this section would exclude from gross income more than $2,500 of educational assistance furnished to the dependents of an employee (in the aggregate) during a calendar year, this section shall apply only to the first $2,500 of such assistance so furnished.

(c)

Conforming amendment

Paragraph (2) of section 127(a) of such Code is amended— (1)by striking an individual and inserting the employee, and (2)in the heading thereof by striking

maximum exclusion

and inserting

maximum exclusion for assistance furnished to employee

. (d)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.