IR-2025-81, Aug. 6, 2025 — Washington, D.C.

The Internal Revenue Service (IRS) has announced that employers may continue using educational assistance programs to help employees pay off student loans tax-free through December 31, 2025.

Key Details of the Provision

  • Employers can contribute up to $5,250 per employee per year toward student loan repayment.

  • Payments made under this program are not counted as taxable wages.

  • This benefit was originally expanded during pandemic relief efforts and remains in effect for Tax Year 2025.

  • Employers may include student loan repayment alongside traditional education benefits such as:

    • Tuition assistance

    • Textbooks and required course materials

    • Other qualified educational expenses

Why This Matters for Employers and Employees

This tax-free repayment option helps:

  • Employees reduce the burden of student debt without extra tax liability.

  • Employers attract and retain top talent by offering meaningful financial wellness benefits.

How to Set Up or Update a Program

Employers can integrate student loan repayment into their existing educational assistance plans with minimal adjustments. For step-by-step details, see IRS Publication 15-B, Employer’s Tax Guide to Fringe Benefits.

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Frequently Asked Questions

What is the IRS student loan repayment benefit for 2025?

Employers may pay up to $5,250 annually per employee toward student loan repayment without the amount being treated as taxable wages.

How long does this benefit last?

The tax-free repayment option is available through December 31, 2025 under current law.

What expenses qualify under educational assistance programs?

In addition to student loan payments, employers can cover tuition, enrollment fees, textbooks, and other approved education-related costs.

Where can employers find official IRS guidance?

Employers should consult Publication 15-B, Employer’s Tax Guide to Fringe Benefits, for detailed rules and compliance information.