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(a) The following shall be exempt from all taxation by the Commonwealth and its political subdivisions:
(1) Undistributed earnings on an account.
(2) An amount distributed from an account that is not included in gross income under section 529A(c)(1) of the Internal Revenue Code.
(b) The following shall apply:
(1) An amount contributed to an account shall be deductible from the taxable income of the contributor under this article for the tax year the contribution was made.
(2) The total contributions made by a contributor during a taxable year to all accounts that are allowable as a deduction under this section shall not exceed the dollar amount under section 2503(b) of the Internal Revenue Code.
(3) The deduction shall not result in the contributor's taxable income being less than zero.
(4) The department and the Treasury Department shall cooperate in verifying account information relating to contributions to an account itemized by a contributor and the contributor's specific contributions.
(c) An amount that is distributed from an account and not otherwise exempt from taxation under this section shall be taxable income to the designated beneficiary under this article.
(d) A change in designated beneficiaries under section 529A(c) of the Internal Revenue Code shall not constitute a taxable event.
(e) As used in this section, the following words and phrases shall have the meanings given to them in this subsection unless the context clearly indicates otherwise: "Account." An ABLE savings account as defined in section 102 of the Pennsylvania ABLE Act. "Contributor." An individual who makes a contribution to an account as defined in section 102 of the Pennsylvania ABLE Act. "Designated beneficiary." The term shall have the same meaning as provided in section 102 of the Pennsylvania ABLE Act. "Internal Revenue Code." The Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.), as amended. "Pennsylvania ABLE Act." The act of April 18, 2016 (P.L.128, No.17), known as the Pennsylvania ABLE Act. "Pennsylvania ABLE Savings Program." The program established under the Pennsylvania ABLE Act. "Qualified disability expense." The term shall have the same meaning as provided in section 102 of the Pennsylvania ABLE Act.
(304.2 added Oct. 30, 2017, P.L.672, No.43)