IRS updates educational assistance FAQ
April 23, 2026
The IRS has revised its frequently asked questions in Fact Sheet 2026-10 regarding educational assistance programs.
Notably, an employee's gross income can exclude educational assistance benefits up to $5,250 under a section 127 program. This exclusion will adjust for cost-of-living increases after 2026, as stated in the One Big Beautiful Bill Act.
For the years 2025 and 2026, employees will not owe tax on the first $5,250 of these benefits, which should not be included in wages reported on Form W-2.
The updated FAQs also clarify how these rules apply to qualified education loans and provide a modified sample plan. Read more.
