In October of 2010, the Internal Revenue Service issued guidance clarifying the federal income tax treatment of graduate tuition waivers provided by educational institutions. IRS Office of Chief General Counsel Memorandum 20103901F concludes that fee waivers for graduate coursework are excludable from income up to $5,250 per calendar year. Graduate fee waivers exceeding $5,250 are reportable as taxable income on Form W-2, subject to your W-4 certificate withholding rate and applicable social security taxes.
More information is available on our Employee Graduate Fee Waiver page