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Employer Educational Assistance Exclusion Calculator ($5,250, Section 127)

What do these figures come to once the work is shown?

Tax-free employer education and student loan payments up to $5,250 and the taxable excess.

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Your figures
Example figuresIllustrative only. Type over them with your own.
Excluded from wages
$5,250
Section 127, $5,250 per year
Taxable wages from the excess
$1,750
Total educational assistance
$7,000
Drawn to one scale
Excluded from wages$5,250
Taxable wages from the excess$1,750
Total educational assistance$7,000
All results
MeasureResult
Excluded from wages$5,250
Taxable wages from the excess$1,750
Total educational assistance$7,000
How this was worked out
Work shownrecomputed as you type
Exclusion = lesser of total assistance or $5,250
Student loan payments count toward the same $5,250

Illustrative arithmetic on the figures you enter. Check the result against your firm's methodology before relying on it.

The formulas

  • Exclusion = lesser of total assistance or $5,250
  • Student loan payments count toward the same $5,250

How it works

Rev. Proc. 2025-32 section 2.09 states that the One Big Beautiful Bill Act made permanent the inclusion of employer payments of principal or interest on qualified education loans in Section 127 educational assistance. The $5,250 maximum exclusion is adjusted for inflation only for tax years beginning after 2026, so it stays $5,250 for 2026.

Payments must be made under a written educational assistance program. Amounts above $5,250 are wages unless they qualify as a working condition fringe benefit for job-related courses.

Illustrative figures only. Check the result against your firm's methodology before relying on it.

Common questions

Can I also deduct the student loan interest the employer paid?

No. Interest paid with excluded employer funds is not deductible by you.

Does it cover graduate school?

Yes. Section 127 covers undergraduate and graduate courses.

Is the excess subject to payroll tax?

Yes. Taxable excess is wages for income tax, Social Security and Medicare.

Sources

Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.

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