Senate Acts on Tax Relief for Health Care and Tuition Savings, Tuition Aid to Families of Fallen Soldiers, Minimum Wage

Harrisburg – The state Senate has approved three measures that will expand tax benefits for health care and tuition savings accounts, provide tuition aid to families of fallen National Guard members, and raise the minimum wage, according to state Senator Bob Robbins (R-50), who supported the bills.

The measures were sent to the governor to be signed into law.

Robbins said Senate Bill 300, which he co-sponsored, will help Pennsylvanians contribute to Health Savings Accounts (HSAs). The measure excludes contributions to HSAs from the state Personal Income Tax. Prior to Senate Bill 300, only HSA earnings and withdrawals for qualified medical expenses were excluded.

HSAs are personal savings accounts whose funds can be used to help pay for qualified medical expenses incurred by individuals, their spouses or dependents. They would apply to high-deductible policies designed to cover big expenses -- freeing up regular health insurance to cover more routine expenses at lower cost.

"This is good news for Pennsylvania families and for small businesses struggling to offer employees affordable health coverage," said Robbins. "Health Savings Accounts give individuals and families the means to pay for healthcare services of their own choosing, without constraint by insurers or employers."

Robbins said Senate Bill 300 also makes contributions, rollovers, earnings and distributions on all qualified tuition programs (529 plans) deductible from taxable income. Currently Pennsylvania's Guaranteed Savings Plan, only earnings and distributions are exempt from Personal Income Tax.

Robbins said Senate Bill 1043 also was approved, legislation he co-sponsored to provide tuition credits to spouses and children of Pennsylvania National Guard members who die while on active military duty.

The measure would also cover all or a portion of the life insurance premiums for Pennsylvania National Guard members called to active duty to serve in a combat zone as well as those killed in the line of duty on or after September 11, 2001, Robbins said.

"No amount of financial assistance can make up for the loss of a spouse, father or mother killed while serving their country," said Robbins, a Vietnam War veteran. "But we can and should step in and help the families of fallen soldiers in any way possible."

The Senate also passed legislation to increase the state's minimum wage while protecting small businesses, Robbins said.

Senate Bill 1090 would increase the minimum wage from $5.15 to $6.25 on January 1, 2007, followed by another increase to $7.15 on July 1, 2007. To reduce the burden on small businesses, the bill also includes a lower minimum wage for businesses with the equivalent of 10 full-time employees or less, as well as a lower minimum wage for workers age 17 and younger.

"This was a contentious issue that required thought and compromise to help low-income workers and protect small businesses, which create most of our jobs," said Robbins. "This bipartisan legislation accomplishes those goals."

CONTACT:

Mike Hengst
717-787-1322