Financial Advantages
Tax-Free
Student Loan Repayment Benefits
Take advantage of IRS Section 127 to provide up to $5,250 in annual contributions toward your employees' student loans—completely tax-free for both your business and your team.
Accelerate Payoff
Employer contributions go directly toward the principal balance, reducing total interest paid and shortening the life of the loan.
Tax-Free Status
Under the CARES Act, these payments are non-taxable for employees and tax-deductible for employers up to $5,250 per year.
Permanent Legislation
Initially a temporary measure, tax-free student loan repayment assistance was made permanent through the One Big Beautiful Bill Act.
Program Benefits
$5,250 maximum annual contribution
Tax-deductible for your business
Excluded from employee gross income
Enhances recruitment and loyalty
Eligibility Rules
Must be a legitimate employee of LLC or S Corp
Must not own more than 5% of company equity
Only qualifying federal or private loans eligible
Requires a formal Section 127 Plan document
The History of Section 127
The IRS tax code 127 was created in 1978 to allow employers to provide tax-free assistance to employees pursuing education. While initially temporary, it became a permanent fixture in 2012.
In response to the 2020 pandemic, the CARES Act expanded this provision to include student loan debt relief. Paidly helps you navigate these regulations to maximize retention and recruitment.
IRS Publication 15-B
For deep-dives into compliance, eligibility, and the formal Section 127 Plan requirements, consult the official IRS documentation.
View IRS PublicationROI Snapshot
Calculate Your
Potential Savings.
Our ROI calculator helps you visualize the impact of a tax-free repayment benefit on your recruitment savings and turnover reduction.
Explore Full CalculatorTotal Employees
500
Average Annual Salary
$68,000
Current Turnover Rate
24%
Estimated Paidly Adoption
24%
Annual Savings
40% improvement
From reduced turnover and hiring costs
The information provided is of a general nature and an educational resource. It is not intended to provide advice or address the situation of any particular individual or entity. Any recipient shall be responsible for the use to which it puts this document. Paidly shall have no liability for the information provided. While care has been taken to produce this document, Paidly does not warrant, represent or guarantee the completeness, accuracy, adequacy, or fitness with respect to the information contained in this document. The information provided does not reflect new circumstances, or additional regulatory and legal changes.
Ready to Eliminate Student Debt?
Whether you're an employer building a modern benefits package or an individual ready to crowdfund your payoff, Paidly is your platform.