The IRS released updated FAQs on Section 127 educational assistance programs, covering eligibility, tax treatment and recent legislative updates. Employees may exclude from their income up to $5,250 (adjusted for inflation after 2026) in combined benefits annually. Excess amounts are taxable, and no carry forward is allowed. Plans must be written, cover only employees and meet nondiscrimination rules. Eligible expenses include tuition, fees, books, supplies, equipment, and interest or principal on qualified student loans. Meals, lodging and transportation do not qualify. Employers and employees should review these rules to ensure compliance and maximize benefits. Have questions? We can help.
