The IRS informed companies that they can provide up to $5,250 in tax-free educational aid to employees each year.
Employers having educational aid programs, based on the news release, may utilize them to help employees settle their student loan obligations.
The IRS emphasized that educational assistance programs have been accessible for many years, however the option to use them to pay student debt is only accessible for payments made after March 27, 2020. They will be open until December 31, 2025, according to existing legislation.
Employer Can Help You Pay Your Debt Tax Free
Under law, tax-free educational assistance benefits are restricted to $5,250 per employee per year. Generally, help exceeding that threshold is taxable as wages.
According to the IRS, your employer can assist you pay down your debt in three ways:
- Utilize the educational assistance program to cover the employee’s tuition and fees.
- Support for the employee’s books, supplies, tools, and education-related costs.
- Pay down your eligible college loans’ principal and interest. Payments made directly to the lender as well as payments made to the employee are eligible.
Employers who fail to offer an educational assistance program should consider establishing one in order to provide more advantages in a tight labor market, according to the IRS. Beginning at 2 p.m the agency will host a free 75-minute webinar.
ET on Thursday, September 14th. Registration along with other information are available on IRS.gov’s Webinars for Tax Practitioners as well as Webinars for Small Businesses pages.
Read More: 2024 VA COLA Boost: Anticipating The Benefits Of The Upcoming Adjustment
IRS Will Distribute an Additional Information
Further details will be distributed by the IRS via social media posts and e-newsletters to the small business, tax-exempt, and tax professional sectors.
Student loan relief of $5,250 per year, or $437 per month, would be welcomed news for students struggling to pay off their debt. Student loan debt affects almost 48 million borrowers.
In accordance with the Education Data Initiative, the standard federal student loan debt in April 2023 will be $37,574 per borrower. Private student loan debt is often less than $55,000 per individual.