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Press Release: MA Senate Rolls Back Tax Subsidy for Private K-12 Tuition

Fri, 05/25/2018

May 25, 2018
Contact: Tara Smith
Tel. (617) 722-1578
BOSTON – The Massachusetts Senate passed a budget amendment that would preserve the Massachusetts 529 savings plan, a way to save for college.
In 2016, Massachusetts adopted a deduction from Massachusetts income for deposits to tax free 529 savings plans, which incorporated the federal tax definition. When Congress changed federal tax law in 2017, it allowed the use of tax free 529 savings plans to pay for elementary and secondary education as well.
“Last year’s change in federal law essentially created a voucher program for wealthy people to send children to private schools, while costing money that could fund public schools,” said Senator Jehlen, sponsor of the amendment. “This deduction was adopted in Massachusetts to help families save for college---not to allow people to divert tax free money to private high school or elementary education.”
The federal change is so warped, it defined “higher education” as “elementary or secondary public, private, or religious school.”
Senator Eric Lesser (D-Longmeadow) also spoke on the floor in support of the amendment.
“College savings plans should be exactly what they sounds like — plans to help middle class families save for college for their children. They should not be hijacked to give people a tax break for sending their kids to private schools at the taxpayers’ expense,” said Sen. Lesser. “The cost of college continues to grow, and savings plans like these are just one way we can help ease the student debt crisis and help families afford a college education.”
Critically, a recent study showed that this change to the use of 529 plans could reduce Massachusetts state tax revenue by $6.7 million a year.
The amendment, now incorporated into the Senate budget, will be among the issues negotiated by House and Senate members in conference committee.