Adjust Text Size

For Immediate Release
June 13, 2001

White: State Tuition Savings Program to be Federal Tax-Free

Harrisburg -- Pennsylvania families who participate in the state’s tuition account program (TAP) received a $15 million boost recently when President Bush signed his tax cut bill into law, state Sen. Mary Jo White (R-21) said today. 

  That’s because under the federal tax bill, TAP and other similar college savings programs are exempt from federal taxation, beginning in January, she said. That means TAP earnings will be free of federal tax, as well as state and local tax. 

“This is great news for families who are trying to save for college,” said White.  “Until the law change, earnings on TAP accounts were taxable as federal income at the time the money was used to pay for college.” 

The new tax break applies not only to the 58,000 current TAP Guaranteed College Savings Plan participants but also to all new enrollees in either the guaranteed savings program or in the upcoming TAP Mellon/Dreyfus college investment program – which will begin accepting applications this fall. 

The TAP guaranteed program allows contributors to lock in current tuition rates so when costs go up at colleges and universities covered in the program, enrollees will not be adversely affected. 

Money invested in the Mellon/Dreyfus program allows for a variable rate of return. There is no guaranteed rate of savings for participants and accounts can increase or decrease depending on the stock market. 

For more information on the TAP programs, call (800) 440-4000 or visit the Web site at www.patap.org. 

CONTACT:

Leigh Ramsey (717) 787-9684