I 

114TH CONGRESS 

2D SESSION H. R. 5382 

To amend the Internal Revenue Code of 1986 to exclude from gross income 

amounts paid by an employer on an employee’s student loans. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 3, 2016 

Mr. ISRAEL introduced the following bill; which was referred to the Committee 

on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to exclude 

from gross income amounts paid by an employer on 

an employee’s student loans. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Student Loan Employ5 ment Benefits Act of 2016’’. 

6 SEC. 2. STUDENT LOAN PAYMENT ASSISTANCE PROGRAMS. 

7 (a) IN GENERAL.—Part III of subchapter B of chap8 ter 1 of the Internal Revenue Code of 1986 is amended 

9 by inserting after section 127 the following new section: 


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1 ‘‘SEC. 127A. STUDENT LOAN PAYMENT ASSISTANCE PRO2 GRAMS. 

3 ‘‘(a) IN GENERAL.—Gross income of an employee 

4 does not include amounts paid or incurred by the employer 

5 for student loan payment assistance provided to such em6 ployee if the assistance is furnished pursuant to a program 

7 which is described in subsection (c). 

8 ‘‘(b) LIMITATIONS.— 

9 ‘‘(1) ASSISTANCE LIMITATION.—The amount 

10 taken into account under subsection (a) with respect 

11 to an individual for student loan assistance with re12 spect to student loan payments during a taxable 

13 year shall not exceed $5,000. 

14 ‘‘(2) EARNED INCOME LIMITATION.—The 

15 amount excluded from the income of an employee 

16 under subsection (a) for any taxable year shall not 

17 exceed the earned income of such employee for such 

18 taxable year. 

19 ‘‘(c) STUDENT LOAN PAYMENT ASSISTANCE PRO20 GRAM.— 

21 ‘‘(1) IN GENERAL.—For purposes of this sec22 tion a student loan payment assistance program is 

23 a separate written plan of an employer for the exclu24 sive benefit of his employees to provide such employ25 ees with student loan payment assistance which 

26 meets the requirements of paragraphs (2) through 


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1 (9) of this subsection. If any plan would qualify as 

2 a student loan payment assistance program but for 

3 a failure to meet the requirements of this subsection, 

4 then, notwithstanding such failure, such plan shall 

5 be treated as a student loan payment assistance pro6 gram in the case of employees who are not highly 

7 compensated employees. 

8 ‘‘(2) DISCRIMINATION.—The contributions or 

9 benefits provided under the plan shall not discrimi10 nate in favor of employees who are highly com11 pensated employees (within the meaning of section 

12 414(q)). 

13 ‘‘(3) ELIGIBILITY.—The program shall benefit 

14 employees who qualify under a classification set up 

15 by the employer and found by the Secretary not to 

16 be discriminatory in favor of employees described in 

17 paragraph (2). 

18 ‘‘(4) PRINCIPAL SHAREHOLDERS OR OWNERS.— 

19 Not more than 25 percent of the amounts paid or 

20 incurred by the employer for student loan payment 

21 assistance during the year may be provided for the 

22 class of individuals who are shareholders or owners 

23 (or their spouses or dependents), each of whom (on 

24 any day of the year) owns more than 5 percent of 


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1 the stock or of the capital or profits interest in the 

2 employer. 

3 ‘‘(5) NO FUNDING REQUIRED.—A program re4 ferred to in paragraph (1) is not required to be 

5 funded. 

6 ‘‘(6) NOTIFICATION OF ELIGIBLE EMPLOY7 EES.—Reasonable notification of the availability and 

8 terms of the program shall be provided to eligible 

9 employees. 

10 ‘‘(7) STATEMENT OF EXPENSES.—The plan 

11 shall furnish to an employee, on or before January 

12 31, a written statement showing the amounts paid 

13 or expenses incurred by the employer in providing 

14 student loan payment assistance to such employee 

15 during the previous calendar year. 

16 ‘‘(8) BENEFITS.— 

17 ‘‘(A) IN GENERAL.—A plan meets the re18 quirements of this paragraph if the average 

19 benefits provided to employees who are not 

20 highly compensated employees under all plans 

21 of the employer is at least 55 percent of the av22 erage benefits provided to highly compensated 

23 employees under all plans of the employer. 

24 ‘‘(B) SALARY REDUCTION AGREEMENTS.— 

25 For purposes of subparagraph (A), in the case 


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1 of any benefits provided through a salary reduc2 tion agreement, a plan may disregard any em3 ployees whose compensation is less than 

4 $25,000. For purposes of this subparagraph, 

5 the term ‘compensation’ has the meaning given 

6 such term by section 414(q)(4), except that, 

7 under rules prescribed by the Secretary, an em8 ployer may elect to determine compensation on 

9 any other basis which does not discriminate in 

10 favor of highly compensated employees. 

11 ‘‘(9) EXCLUDED EMPLOYEES.—For purposes of 

12 paragraphs (3) and (8), there shall be excluded from 

13 consideration— 

14 ‘‘(A) subject to rules similar to the rules of 

15 section 410(b)(4), employees who have not at16 tained the age of 21 and completed 1 year of 

17 service (as defined in section 410(a)(3)), and 

18 ‘‘(B) employees not included in a student 

19 loan payment assistance program who are in20 cluded in a unit of employees covered by an 

21 agreement which the Secretary finds to be a 

22 collective bargaining agreement between em23 ployee representatives and 1 or more employees, 

24 if there is evidence that student loan payment 

25 benefits were the subject of good faith barVerDate Sep 11 2014 21:47 Jun 03, 2016 Jkt 059200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H5382.IH H5382

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1 gaining between such employee representatives 

2 and such employer or employers. 

3 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur4 poses of this section— 

5 ‘‘(1) STUDENT LOAN PAYMENT ASSISTANCE.— 

6 ‘‘(A) IN GENERAL.—The term ‘student 

7 loan payment assistance’ means the payment of 

8 principal or interest on— 

9 ‘‘(i) any indebtedness incurred by the 

10 employee solely to pay qualified higher 

11 education expenses (as defined in section 

12 221) which— 

13 ‘‘(I) are paid or incurred within a 

14 reasonable period of time before or 

15 after the indebtedness was incurred, 

16 and 

17 ‘‘(II) are attributable to edu18 cation furnished during a period dur19 ing which the employee was an eligible 

20 student, or 

21 ‘‘(ii) any indebtedness used to refi22 nance indebtedness described in clause (i). 

23 Such term shall not include any payment of 

24 principal or interest on indebtedness owed to a 

25 person who is related (within the meaning of 


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1 section 267(b) or 707(b)(1)) to the taxpayer or 

2 to any person by reason of a loan under any 

3 qualified employer plan (as defined in section 

4 72(p)(4)) or under any contract referred to in 

5 section 72(p)(5). 

6 ‘‘(B) ELIGIBLE STUDENT.—The term ‘eli7 gible student’ has the meaning given such term 

8 by section 25A(b)(3). 

9 ‘‘(C) DEPENDENT.—The term ‘dependent’ 

10 has the meaning given such term by section 

11 152 (determined without regard to subsections 

12 (b)(1), (b)(2), and (d)(1)(B) thereof). 

13 ‘‘(2) EARNED INCOME.—The term ‘earned in14 come’ shall have the meaning given such term in 

15 section 32(c)(2), but such term shall not include any 

16 amounts paid or incurred by an employer for stu17 dent loan payment assistance to an employee. 

18 ‘‘(3) EMPLOYEE.—The term ‘employee’ in19 cludes, for any year, an individual who is an em20 ployee within the meaning of section 401(c)(1) (re21 lating to self-employed individuals). 

22 ‘‘(4) EMPLOYER.—An individual who owns the 

23 entire interest in an unincorporated trade or busi24 ness shall be treated as his own employer. A part25 nership shall be treated as the employer of each 


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1 partner who is an employee within the meaning of 

2 paragraph (3). 

3 ‘‘(5) ATTRIBUTION RULES.— 

4 ‘‘(A) OWNERSHIP OF STOCK.—Ownership 

5 of stock in a corporation shall be determined in 

6 accordance with the rules provided under sub7 sections (d) and (e) of section 1563 (without re8 gard to section 1563(e)(3)(C)). 

9 ‘‘(B) INTEREST IN UNINCORPORATED

10 TRADE OR BUSINESS.—The interest of an em11 ployee in a trade or business which is not incor12 porated shall be determined in accordance with 

13 regulations prescribed by the Secretary, which 

14 shall be based on principles similar to the prin15 ciples which apply in the case of subparagraph 

16 (A). 

17 ‘‘(6) UTILIZATION TEST NOT APPLICABLE.—A 

18 student loan payment assistance program shall not 

19 be held or considered to fail to meet any require20 ments of subsection (c) (other than paragraphs (4) 

21 and (8) thereof) merely because of utilization rates 

22 for the different types of assistance made available 

23 under the program. 

24 ‘‘(7) DISALLOWANCE OF EXCLUDED AMOUNTS

25 AS CREDIT OR DEDUCTION.—No deduction or credit 


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1 shall be allowed to the employee under any other 

2 section of this chapter for any amount excluded from 

3 the gross income of the employee by reason of this 

4 section.’’. 

5 (b) CONFORMING AMENDMENTS.—Sections 

6 221(d)(2)(A), 414(n)(3)(C) and (t)(2), 3121(a)(18), 

7 3306(b)(13), 3401(a)(18), and 6039D(d)(1) of such Code 

8 are each amended by inserting ‘‘127A,’’ after ‘‘127,’’. 

9 (c) CLERICAL AMENDMENT.—The table of sections 

10 for part III of subchapter B of chapter 1 of such Code 

11 is amended by inserting after the item relating to section 

12 127 the following new item: 

‘‘Sec. 127A. Student loan payment assistance programs.’’. 

13 (d) EFFECTIVE DATE.—The amendments made by 

14 this section shall apply to taxable years beginning after 

15 the date of the enactment of this Act. 

Æ 


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