HARRISBURG, PA — Pennsylvania has introduced new tax credits for employers who contribute to their employees’ PA 529 and PA ABLE savings accounts. This initiative, set to commence in 2025, marks a significant step in supporting educational and disability-related savings efforts across the Commonwealth.
Treasurer Stacy Garrity, alongside PA Chamber of Business and Industry President and CEO Luke Bernstein, announced the availability of these credits, highlighting their potential to fortify Pennsylvania businesses as attractive workplaces. The PA 529 College and Career Savings Program and the PA ABLE program for individuals with disabilities are both instrumental in helping families prepare for future expenses, and the new tax credits are expected to amplify their impact.
Starting in January, employers will be eligible for a 25 percent tax credit on matching contributions up to $500 per employee per year. This incentive is designed to encourage businesses to participate actively in their employees’ financial futures, thereby enhancing recruitment and retention strategies. Luke Bernstein commended the initiative, noting its dual benefit: aiding workforce development while offering families the means to save for crucial needs.
The legislative journey of these tax credits was marked by bipartisan cooperation, with key contributions from Rep. Kristin Marcell (R-178), Rep. Paul Friel (D-26), Rep. Greg Scott (D-54), Senate Majority Leader Joe Pittman (R-41), and Sen. Camera Bartolotta (R-46). Their collective efforts culminated in the integration of these credits into Pennsylvania’s Tax Code as part of Act 56, signed into law by Governor Josh Shapiro.
This makes Pennsylvania the pioneering state to establish such a credit for its ABLE program, setting a precedent for other states. The tax credit provision originally appeared in House Bill 1745, driven by Reps. Marcell and Friel, while Rep. Greg Scott’s House Bill 2119 contributed a crucial provision for rolling over PA 529 funds into Roth IRAs without incurring state tax penalties.
Senate Majority Leader Joe Pittman, a significant proponent of the initiative, emphasized the broader economic implications, underscoring the incentives’ potential to alleviate financial strain and prepare families for future educational and retirement needs.
As these new measures come into effect, they promise to strengthen Pennsylvania’s workforce by offering more comprehensive savings options and ensuring that families have greater flexibility in managing their financial futures. This progressive approach not only supports current employees but also positions the Commonwealth as a leader in workforce development and financial empowerment.
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