At 5,593 pages, the Consolidated Appropriations Act is one of the longest pieces of legislation in U.S. history. Sprinkled across its many pages are several provisions that can help business owners struggling to recruit and retain employees amid the ongoing Great Resignation.
Perhaps the most effective of these provisions is one allowing employers to provide up to $5,250 a year toward an employee’s student loan payments. Such payments can be made to the employee directly or their lender; the employee would pay no taxes on this benefit.
The $5,250 applies to both the student loan repayment as well as other educational assistance (e.g., tuition, fees and books) provided by the employer.
The provision also allows a business owner to deduct their own education expenses so long as the coursework they’re taking is related to their business operations or occupation.
While the provision will remain in effect through 2025, advocates of tax-advantaged loan repayment benefits are hoping Congress will make this change permanent.
Tuition reimbursement can help attract and retain better employees, while enabling businesses to reduce the costs associated with high turnover.
Well, for starters, offering tuition reimbursement can be a great way to build your company’s reputation.
It shows you are dedicated to helping your employees learn and grow on the job.
Also, employees who are offered tuition reimbursement usually stay longer with your company. Employees who take advantage of tuition reimbursement programs typically feel a sense of loyalty to their company and feel confident in the fact that they can grow in their roles instead of seeking career growth elsewhere. Because the benefit is so directly personal, it keeps motivation high.
FMLA, WOTC and Business Meals
Another important CAA provision, also extended through 2025, is the tax credit available to employers that grants employees paid family and medical leave under certain circumstances.
The temporary credit ranges from 12.5% to 25% of wages paid to qualifying employees for up to 12 weeks of family and medical leave per taxable year.
What are these “certain circumstances?”
Regular sick leave doesn’t count. We’re talking about time off to care for a seriously-ill family member or to bond with a new child, for example.
There are a number of conditions that must be met under this law, so we’d suggest interested employers give a close read to Section 45S of the Internal Revenue Code.
Elsewhere in the CAA, lawmakers extended through 2025 the Work Opportunity Tax Credit, available to employers who hire individuals from one of 10 groups, including veterans, members of families in the Supplemental Nutritional Assistance Program, and the long-term unemployed.
Qualifying can be tricky, so, again, check IRS websites or speak to your accountant for guidance.
Finally, there’s also the CAA’s deduction for business meals.
Under the law, a business can take a 100% deduction for business-related food and beverage expenses, including any carry-out or delivery meals provided by a restaurant, that are paid or incurred in 2022. The deduction drops back to 50% of such expenses in 2023.
The Mahoney Group is one of the largest independent commercial insurance and employee benefits brokerages in the U.S. For more information, contact us online or call 877-440-3304.
This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.