David Slade is a senior Post and Courier reporter. His work has been honored nationally by Society of Professional Journalists, American Society of Newspaper Editors, Scripps foundation and others. Reach him at 843-937-5552 or dslade@postandcourier.com

Get Out: Charleston Collegiate (copy)

Students at Charleston Collegiate, a private school on Johns Island. Changes to federal tax law offers a benefit to parents who pay private school tuition through 529 savings plans. David Quick/Staff

For South Carolina taxpayers who are paying tuition for elementary or secondary (K-12) schools, the recent changes to federal tax laws offers a new perk that can reduce their state income tax bills, including taxes for 2017.

Federal tax law now allows people with 529 plans — the college savings accounts that offer state and federal tax benefits — to withdraw up to $10,000 per student, per year, for "expenses for tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school.’

Note: An earlier version of this column incorrectly stated that parents who home-school can also now use 529 funds for certain expenses, such as books and curriculum materials. That provision was included in the House-Senate tax agreement, but was dropped from the final language before the law was signed.

The change in law offers those paying for private schools the same immediate and long-term tax benefits already enjoyed by those using 529 plans to pay for higher education expenses.

For those unfamiliar with 529 plans, they are similar to retirement savings plans, and are named after the section of the tax code that created them years ago.

Immediate benefits:

In South Carolina, funds contributed to the state's 529 plan, Future Scholar, are deductible from South Carolina taxable income. For example, parents who contribute $10,000, and who pay South Carolina's top income tax rate of 7 percent, would see their income tax bill reduced by $700.

Contributions for the 2017 tax year can be made until the April due date for tax filing, so it's not too late to make a 529 plan contribution that would result in a 2017 South Carolina income tax deduction.

That means parents anticipating a private school tuition bill in the fall can reduce the cost of that expense by funding a 529 account with a contribution for the 2017 tax year, claiming the state tax deduction, and later using the funds contributed to pay the tuition bill.

There's no limitation on how quickly the funds can be withdrawn for qualified education purposes. As I've reported in the past, a parent facing college tuition bill for a child could put that tuition money in a 529 plan, withdraw it days later to pay the tuition bill, and claim it as a state tax deduction.

Now, parents — or anyone funding a 529 account — can do the same, but with private school tuition. Withdrawals are limited to $10,000 per year, per student. To put it another way, South Carolina taxpayers could shave up to $700 off the cost of tuition each year, per student.

While withdrawals for K-12 expenses are limited to $10,000 per year, per student, contributions are not.

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Those funding a 529 account can contribute up to the federal gift tax exclusion limit, which was $14,000 per person in 2017 and rises to $15,000 this year. Each spouse in a married couple could contribute up to the maximum amount, per child, and those with newly established 529 plans can "front-load" five years' worth of excluded contributions.

So, wealthy folks could fund years of tuition payments in advance, and claim the income tax savings right away.

Long-term benefits:

A goal of 529 plans is to help parents save and invest for future college expenses. While making a contribution can provide quick savings, from the South Carolina income tax deduction, gains from investments in 529 accounts are exempt from federal and state taxes so long as the money is used to pay qualifying education expenses.

For example, putting $10,000 in a 529 account results in a savings of up to $700 on that year's South Carolina income tax bill. But if that $10,000 is invested for a child's future college expenses, and the value of the invested funds increases over time to $20,000 while the child grows up, none of the investment gains are taxed when the money is eventually withdrawn to pay tuition and other qualifying expenses.

South Carolina's Future Scholar plan offers many investment choices, similar to those one might see in a 401k retirement plan. Expenses are low, for those who invest directly; expenses are higher if investments are made through a financial adviser. Check out futurescholar.com for more information.

Funds in a 529 plan are considered an asset of the owner, typically the parent, not the beneficiary, typically the child. If funds are withdrawn for nonqualified expenses, that can trigger a 10 percent penalty and taxes on any earnings.

Reach David Slade at 843-937-5552. Follow him on Twitter @DSladeNews.