What type of expenses can be included in tax-free educational assistance benefits from an employer?

The correct answer is textbooks, as they are specifically recognized under the Internal Revenue Code as qualifying expenses for tax-free educational assistance benefits provided by employers. When an employer offers educational assistance to employees, expenses that are directly related to the cost of education, such as tuition and required course materials, are exempt from taxation. Textbooks fall into this category because they are essential for completing coursework and are often required by educational programs.

In contrast, meals, lodging, and transportation are generally not classified as qualifying educational expenses for the purpose of tax-free treatment under employer-provided educational assistance. While these costs may be associated with education, they do not typically meet the criteria outlined for tax-free benefits. This focus on necessary materials ensures that employees can receive support in their educational pursuits without incurring additional tax liabilities.