Public resource · Not tax advice
IRS Section 127 — Educational Assistance Programs
How employer educational assistance relates to education benefits orchestration on QueryTek EBM.
What is IRC Section 127?
Section 127 of the Internal Revenue Code allows employers to maintain a separate written educational assistance program for employees. When the plan meets statutory and regulatory requirements, employees may exclude certain employer-paid educational assistance from gross income, subject to annual limits and plan terms described in IRS guidance.
What it can mean for employees
According to IRS frequently asked questions, tax-free educational assistance can include tuition, fees, books, supplies, and equipment for undergraduate or graduate courses, and may include qualifying student loan payments when the employer’s written plan allows. Meals, lodging, transportation, and most sports or hobby courses are generally excluded unless tied to a degree or business need.
The combined annual exclusion amount published in current IRS FAQs is $5,250 per calendar year for eligible assistance — confirm the figure and rules on IRS.gov before relying on it.
How QueryTek EBM fits
EBM connects employers, learning providers, and workforce systems so education benefits are policy-aligned, visible, and auditable from discovery through completion and financial intent. EBM does not replace your HRIS, payroll system, or written §127 plan.
- Align Hub and REQ policy with employer-approved training and spend rules.
- Give employees eligibility-aware discovery and next-step guidance.
- Record utilization and ledger intent to support employer audits and SOX-shaped controls.
- Hand off wage and tax reporting to payroll and counsel — EBM is not the system of record for W-2s.
For HRIS partners and employer clients
Use this resource when explaining how orchestration complements a client’s existing §127 program:
- Confirm the client maintains a current written educational assistance program.
- Map plan eligibility and caps into EBM tenant policy and approved training registry.
- Communicate to employees where to read plan terms and how to use Hub enrollment.
- Coordinate with payroll on W-2 reporting and employer deductions per counsel.
- Point employees and stakeholders to IRS.gov for authoritative tax answers.