If your company has elected to offer Student Loan Repayment, then your employer's repayment contribution is in addition to your normal salary, but you (the employee) are responsible for taxes on that addition. This means you will see additional withholdings on your paystub.
Here's an example:
- If your gross income before this benefit was $1,000 and your tax rate was 25%, then $250 would have been previously withheld for taxes and your take-home pay would be $750.
- Once you elect to receive $50 per month in Student Loan Repayment, your gross income will be $1,000 + $50 = $1,050. This means you'll have $1,050 x 25% = $262.50 withheld for taxes as well as $50 withheld for Peanut Butter to apply to your student loan, so your take-home pay will be $1,050 - $262.50 - $50 = $737.50.