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Warner Norcross + Judd LLP is a corporate law firm with over 230 attorneys serving clients in nine offices throughout Michigan. Among the largest law firms in Michigan, Warner works in virtually all areas of business law.

Michigan Law Firm - Warner Norcross + Judd LLP

The IRS recently revised its FAQs (<a href="https://www.irs.gov/newsroom/updates-to-frequently-asked-questions-about-educational-assistance-programs" target="_blank" rel="noreferrer noopener">IRS FS-2026-10</a>) addressing educational assistance programs under Internal Revenue Code Section 127. This updated guidance replaces the FAQs issued in June 2024 (<a href="https://www.irs.gov/newsroom/frequently-asked-questions-about-educational-assistance-programs" target="_blank" rel="noreferrer noopener">IRS FS-2024-22</a>) and reflects changes made to Section 127 programs by the One Big Beautiful Bill Act. Employers with educational assistance programs should take note of these updates.

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What Are Educational Assistance Programs?

Educational assistance programs are employer-sponsored programs that help employees pay for student loan debt or costs associated with pursuing additional education. Section 127 of the Internal Revenue Code allows employers to exclude from employees’ gross income employer-paid or employer-reimbursed educational assistance provided through a qualified program.

What Changes Were Made to the Section 127 FAQs?

Annual Exclusion Limit Will Be Indexed

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Student Loan Repayment Benefit Made Permanent

More Flexible Reimbursement Timing

Clarified Notice Requirements

No Coverage for Non-Employee Spouses or Dependents

While IRS FAQs are considered informal guidance, employers generally may rely on them if doing so in good faith. Employers should review the revised FAQs and determine whether updates to their educational assistance programs, communications or administrative procedures are necessary or appropriate.

Warner Norcross + Judd Has You Covered

If you have questions about how the updated FAQs affect your educational assistance program or need assistance with implementation, please contact Stephanie Grant, Cade Bunton or a member of Warner’s Employee Benefits Practice Group.

Senior Counsel

Stephanie H. Grant

Associate

Cade M. Bunton

Employee Benefits

Labor and Employment

New IRS FAQs Impact Employer Educational Assistance Programs

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New IRS FAQs Impact Employer Educational Assistance Programs

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