For ten years, Peanut Butter has helped employers offer impactful student loan assistance programs, recognizing the financial strain of student debt. As you know from our recent posts, employers consistently report a high ROI on this benefit, even when offered on a taxable basis.
The OBBB has now made employer student loan repayment permanently tax-free under IRC Section 127. This replaces the tax-free treatment previously granted under the CARES Act and extended through December 31, 2025, by the Consolidated Appropriations Act of 2020. This builds on our advocacy, offering employers a clear and permanent ability to make tax-free student loan contributions.
Permanent Tax-Free Status: Act Now!
With permanent tax-free status via the OBBB, now is the time to implement student loan assistance.
Key Benefits:
- Attract Top Talent: Employers offering student loan repayment are likely to see 13% faster hiring timelines and higher acceptance rates of job offers.
- Boost Retention & Engagement: Companies that help pay down employee student loans may see an increase in employee tenure of over 30%, creating significant savings on employee turnover.
- Proven ROI: Employers consistently experience a high return on investment with student loan repayment, both in tax-free and taxable programs.
- Proven Expertise: For over a decade, Peanut Butter has partnered with organizations across diverse industries to deliver successful programs.
Our Recommended Program: Simple, Effective Contributions (with a Note on Flexibility)
Peanut Butter recommends a straightforward approach: offering either $50 per month or $100 per month to all full-time employees. These consistent contributions are easily understood, budget-friendly, and have a tangible impact on accelerating student loan payoff. While the vast majority of employers will offer this benefit tax-free, some organizations may still choose to offer the benefit on a taxable basis. As we’ve noted before, even taxable contributions can be highly effective in attracting and retaining talent. Additionally, taxable programs can offer greater flexibility, such as allowing contributions towards parent loans or the ability to offer the benefit with more discretion to specific employee groups, including those with higher incomes. However, the most common and widely adopted approach, especially with the permanent tax-free treatment, is to offer $50 or $100 per month to all full-time employees.
Tax-Free Contributions: A Permanent Feature Following Passage of the OBBB
The OBBB has made it clear: your organization can contribute towards employee student loans, and these contributions can be made tax-free. Our recommended contribution levels of $50 or $100 per month align perfectly with creating a meaningful benefit without necessarily reaching the former maximum annual exclusion of $5,250 in all cases.
Peanut Butter: Your Experienced Guide in the Era of the OBBB:
Leverage our decade of leadership:
- Fast, Easy Setup: Our platform ensures quick implementation.
- User-Friendly: Top-rated, intuitive experience for all.
- Dedicated Support: Expert guidance at every step.
A History of Advocacy, Now Realized with the OBBB:
Since 2015, Peanut Butter has been a pioneer, advocating for tax-free status since 2016/2017. The OBBB permanently secures what we’ve championed, replacing the provision set to expire on December 31, 2025. Making the tax-free element of Student Loan Repayment programs a permanent mainstay.
Capitalize on the OBBB Advantage: Implement Your Program Today for 2026
For employers seeking top talent, the OBBB offers assurance that Student Loan Assistance is the solution. Student loan repayment is a powerful tool. Employers have seen high ROI with this benefit on both a taxable and tax-free basis, and the OBBB makes it even stronger with its permanent nature. Existing Peanut Butter clients: you don’t need to take any action to continue offering student loan repayment.
Contact Peanut Butter today to easily implement our proven plans.