An employer may contribute up to $5,250 annually toward an employee’s student loans, and the payment will be excluded from the employee’s W-2 wages. While employers can’t discriminate in favor of highly-compensated employees when providing this benefit, they can provide it only to certain level or geographies of employees if desired. Utilizing this benefit will save the employee income tax and the employer FICA tax. Do you have any employees with student loans? Instead of giving them a raise, tell them that you will now pay their student loans for them – effectively giving that employee a raise without causing the employee to pay tax on that raise.
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