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HD 3804

An Act relative to expanding 529 deductions

194th Legislature (2025-2026) Introduced by Kim Ferguson and 4 co-sponsors

Bill expands tax deductions for 529 education savings contributions to incentivize college savings, potentially reducing state revenue while primarily benefiting higher-income families.

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Bill Summary · HD 3804

Legislative bill overview

HD 3804 would expand Massachusetts residents' ability to deduct contributions to 529 college savings plans from their state income taxes. Currently, Massachusetts allows limited or no deduction for 529 contributions, while many other states offer tax incentives for these education savings accounts. This bill aims to make Massachusetts more competitive and encourage families to save for higher education expenses.

Why is this important

529 plans are tax-advantaged savings vehicles where earnings grow tax-free if used for qualified education expenses. Expanding the deduction could increase college savings participation, particularly benefiting middle and upper-middle-income families who have discretionary income to invest. However, the fiscal impact depends on how many residents would utilize the deduction and whether Massachusetts foregoes significant tax revenue.

Potential points of contention

  • Revenue cost: Expanding tax deductions reduces state tax revenue; fiscal impact estimates would be crucial to understanding the true cost to Massachusetts
  • Equity concerns: 529 deductions primarily benefit higher-income families with capacity to save; lower-income families may see limited benefit regardless of tax incentives
  • Scope of expansion unclear: Without seeing the specific deduction limits or parameters, it's unclear how generous the expansion would be compared to neighboring states

Compiled from official sources — confirm details with the bill’s official record.

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