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Congress gave employers a big reason to help pay down student debt with passage of the Consolidated Appropriations Act of 2021.
Exclusion for employer payments of student loans.
Section 2206 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), expands the definition of educational assistance to include certain employer payments of student loans paid after March 27, 2020. The exclusion applies to the payment by an employer, whether paid to the employee or to a lender, of principal or interest on any qualified education loan incurred by the employee for the employee's education. Qualified education loans are defined in chapter 11 of Pub. 970 Publication 970 (2020), Tax Benefits for Education | Internal Revenue Service (irs.gov). This exclusion expires January 1, 2026, unless extended by future legislation.
Exclusion from wages.
You can exclude up to $5,250 of educational assistance you provide to an employee under an educational assistance program from the employee's wages each year.There are maximum compensation limits defining “highly compensated employees.
This could serve as a valuable incentive when hiring.
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