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    Tax Credits

    Pennsylvania’s 529 Savings Account Employer Matching Contribution Tax Credit Program

    Overview

    Pennsylvania’s 529 Savings Account Employer Matching Contribution Tax Credit Program gives businesses the opportunity to support their employees who may be saving for education or disability-related expenses. The program offers a tax credit to employers who contribute matching funds to an employee’s PA529 college savings account or PA ABLE account.

    The program allows employers to:

    • Support their workforce and families
    • Make their benefits package more competitive
    • Reduce business tax liabilities

    Review the PA529 Savings Account Employer Matching Contribution Tax Credit Guidelines for more details and in-depth information on the program and how to apply.

    Information for Employers

    The program is designed for employers who are contributing matching funds into their employees’ PA529 or PA ABLE accounts. The employer deposits the matching amount during the same tax year that the employee makes their own contribution. The employer match must be equal to what the employee contributes.

    The tax credit is worth 25% of what the employer contributes (with a maximum annual contribution of $500 per employee).

    Example

    1. Employer contributes matching funds in the amount of $500 to an employee’s PA529 or PA ABLE account
    2. 25% of $500 = $125
    3. Tax credit of $125 may be awarded to the employer

    Eligibility for Employers

    To qualify, you must:

    • Be a Pennsylvania business subject to state taxes, such as Personal Income Tax or Corporate Net Income Tax.
    • Employ at least one person and withhold PA income tax from wages.
    • Offer the matching program to all employees.
    • Keep basic documentation, such as proof of contributions and signed opt-in/opt-out forms.
    • Be in good standing with your state taxes.

    How to Apply

    Apply through myPATH by the annual January 31 deadline to receive the credit on matching funds from the prior tax year. If approved, you’ll receive a tax credit certificate by April 30.

    Credit Use

    The credit can be used to reduce certain PA taxes or those shared with partners/shareholders in pass-through entities (including LLCs or S-Corps). Credits are non-refundable, but you can carry them forward for up to three years if your tax liability is lower than your credit. Employers cannot sell or transfer unused credits.

    Contact Information

    For help with applications or general questions about the Pennsylvania 529 Savings Account Employer Matching Contribution Tax Credit Program, contact the Department of Revenue Office of Economic Development at 717-772-3896 or by email at ra-rveconomic-dev@pa.gov.