Employer student loan help: up to $5,250 a year tax-free, now permanent

The rule

An employer’s educational assistance program can pay up to $5,250 a year toward an employee’s student loans without it counting as the employee’s taxable income. Before 2025, that part of the rule was set to end for payments after Dec. 31, 2025. Public Law 119-21, section 70412, removed the end date, so it applies to payments made after Dec. 31, 2025 with no expiration.

It will grow with inflation

The same section adds an inflation adjustment to the $5,250 limit for tax years beginning after 2026, rounded to the nearest $50.

No double benefit

Interest your employer pays under such a program is already tax-free to you. IRS Publication 970 says you can’t also deduct it as student loan interest. In the deduction calculator, enter it in the employer field and it is left out.

Payments outside such a program

If someone else pays interest on your behalf and it isn’t under an employer educational assistance program, for example as extra pay reported on your W-2, Publication 970 treats it as interest you paid, so it can count toward your deduction.

Ask your HR or benefits team whether your employer offers a program and how it reports the payments.

Not financial or legal advice. This page explains the published rules. It does not tell you which plan to choose. Your loan servicer and StudentAid.gov have the final word on your account.

Next guide: How federal student loan interest works