As we wrote a few years back during COVID, the CARES act included a provision allowing employers to repay up to $5,250 of their employee’s student loans as a tax-free benefit. That’s a great benefit for any staff member burdened with student loan debt. Practice owners win too since they can write off the full amount paid without owing any payroll taxes on the loan repayments made. The deadline for this benefit has been extended to 12/31/2025.
This great employee benefit is only partially available to the practice owner’s family members. Just 5% of the amount paid in total for this generous benefit can go to pay down student loans for themselves and their relatives. To offer this employee benefit, you first need to create a written document to distribute to all your staff. Remember, if you offer to pay down the student loan debt for one employee, you need to provide an equivalent benefit to all your employees.
More information about this tax-advantaged employee benefit and a link to a free started template is available at: Section 127 Plans: Ultimate Primer | Highway Benefits.