BOSTON, JULY 6, 2016….A college savings tax deduction bound for passage in the House on Thursday received a strong endorsement from the Senate president on Wednesday.
“Great idea. We’ve been trying to get it done for years. Most states have it. It’s about time,” Senate President Stan Rosenberg told Herald Radio about the proposal contained in an economic development bill.
Rosenberg credited Sen. Eileen Donoghue, co-chair of the Committee on Economic Development and Emerging Technologies, with finding the money to pay for the revenue the state would forego to deliver the tax break – estimated at $8.2 million.
The version of the deduction headed for the House floor in a $915 million economic development bill (H 4461) offsets the lost revenue by restricting existing college tuition payment tax breaks to fulltime Bay State residents exclusively.
The bill released by the House Ways and Means Committee would allow individuals to take a $1,000 tax deduction on contributions into a college savings program, sometimes known as 529 plans. Married couples would be able to deduct $2,000 from their taxable income.
Rosenberg noted Senate language included in the fiscal 2017 budget delivered to the governor last week includes funding to help certain families start college savings.
The annual spending bill sets aside $350,000 for a two-year college savings matching program for low-income individuals or families in at least five cities or towns. The family would need to contribute at least $100 in the first year and matching donations would be capped at $500 per family annually.
“This has worked very well in other states like Maine and other places,” Rosenberg said. He said, “Kudos to everybody involved,” and he hoped Gov. Charlie Baker would sign both the college savings tax deduction and the college savings matching grants into law.
Less than four weeks remain before the end of formal sessions, and the Senate has not yet taken up the economic development bill .