HARRISBURG — Pennsylvania State Treasurer Rob McCord reminded families that contributions made to a Pennsylvania 529 College Savings Program account will help them save on taxes.

“529 plans are generally considered one of the best ways to save for college because of the many valuable tax benefits. For those who save with the Pennsylvania 529 College Savings Program, this includes a generous state tax deduction for contributions,” said Treasurer McCord.

“Last year, Pennsylvanians saved $17 million on their state income taxes as a result of investing in a 529 plan. Anyone can contribute — family members, friends, and neighbors — and take advantage of this deduction.”

Taxpayers can deduct up to $13,000 per beneficiary in Pa. 529 contributions made by Dec. 31 from their Pennsylvania taxable income on state tax returns. Married couples filing jointly can deduct up to $26,000 per beneficiary if each spouse has taxable income of at least the amount deducted.

The Treasurer also highlighted the gift tax exclusion — a tremendous benefit for grandparents or family members who are able to contribute a larger amount to a loved one’s Pa. 529 account. Family and friends can contribute up to $65,000 in a single year, $130,000 for a married couple filing jointly, for each beneficiary without incurring federal gift tax consequences, assuming no other gifts in the next four years.

Pa. 529 savers receive even more valuable tax advantages, said McCord. Earnings in a 529 plan are not subject to yearly taxes as they grow, and, when used for qualified expenses, such as tuition or room and board, earnings are tax-exempt when withdrawn.

Along with the 529 Guaranteed Savings Plan, the state also has the Pa. 529 Investment Plan.

The primary difference between the two plans is the way savings grow. Growth in the Pa. 529 GSP is based on tuition inflation.

For example, if you save enough for a semester at one of Pennsylvania’s State System of Higher Education universities today, you will have enough for a semester there in the future no matter when or how much tuition has gone up in the meantime. Returns in the Pa. 529 IP are based on financial market performance.

The Pa. 529 IP features low fees and more than a dozen conservative and aggressive investment options from Vanguard, one of the nation’s largest financial services companies.

The Pennsylvania 529 College Savings Program is a tax-advantaged way to help make college more affordable and accessible for Pennsylvania families.