Section 127 EAP Educational Assistance Program and Student Loan Relief allows employers to reimburse employees up to $5,250 for tuition, books, supplies, fees, and student loan relief payments extended through 12/31/2025.

How does a Section 127 plan Work?

Section 127 program Section 127 of the Internal Revenue Code provides an exclusion of up to $5,250 per calendar year from an employee’s gross income for amounts received by the employee, provided that certain requirements are met. To qualify under §127, a program must: Have a written plan document.

What is a qualified educational assistance program?

A qualified educational assistance program is a plan established and maintained by an employer under which the employer provides educational assistance to employees. The program must be a separate written plan of the employer.

Is tuition reimbursement considered income?

Payments in excess of $5,250 can still be included in employee benefits packages. That said, all funding over the magic number are considered to be taxable income by the IRS. This means that tuition reimbursement in excess of this amount cannot be deducted and must be declared as income.

What is a Section 129 plan?

Internal Revenue Code (Code) Section 129 allows employers to provide dependent care assistance benefits for their employees on a tax-free basis. These benefit plans are referred to as dependent care assistance programs (DCAPs) or dependent care flexible spending accounts (FSAs).

Is educational assistance a fringe benefit?

Educational Assistance Programs An educational assistance program (EAP) must be a written plan created specifically to benefit your company’s employees. Under such a plan, you can exclude from taxable compensation up to $5,250 of educational assistance provided to each covered employee per year.