[MBAtarga]

The IRS limits the amount of tuition that employers can reimburse tax-free each year. For the 2018 tax year, the limit is $5,250. If your tuition reimbursement is $5,250 or less, your employer should not include it on your W2 and you do not have to pay taxes on it.

As stated above, any amount of tuition reimbursement that exceeds $5,250 is considered a fringe benefit of the job, and the employee will have to pay taxes on that amount.

Edit: The "benefit" to the company is it could attract good talent, and many companies require the employee benefiting to stay at the company for 24 months after receiving the benefit, so employee retention is increased as well.