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Lawmakers Hear Push to Let Families Claim Tax Deduction for Fossil‑fuel‑free 529 Plans
Summary
Parents, climate advocates and retirees urged the Joint Committee on Revenue to allow Massachusetts taxpayers to claim the state 529 tax deduction for low‑fee, fossil‑fuel‑free college savings accounts offered outside the state U.Fund if MEFA does not provide an equivalent plan.
BOSTON — Parents, climate advocates and a retired investor told the Joint Committee on Revenue on Wednesday that Massachusetts should let savers claim the state tax deduction for 529 college savings accounts that exclude fossil‑fuel companies if the state’s U.Fund does not offer an equivalent, low‑fee, age‑based option.
Supporters said the bill, filed as H.3206, would preserve the existing state tax deduction for Massachusetts taxpayers who choose qualified out‑of‑state plans that meet a narrow “fossil‑fuel‑free” definition; it would also cap management fees for any qualifying option. The change would not force the Massachusetts Educational Financing Authority, MEFA, or its manager Fidelity to change their offerings, lawmakers were told.
Advocates argued the current U.Fund offerings lack one or more features families want: a guarantee against fossil‑fuel company holdings, an age‑based glidepath that becomes more conservative as a child nears college, and lower fees. Jessica Bryant of Mothers Out Front said she switched a family 529 to an out‑of‑state fossil‑free fund and would lose Massachusetts’ $1,000 individual/$2,000 joint tax deduction unless MEFA offered a comparable product. Edward Wall of Climate Action Massachusetts said Fidelity’s new Massachusetts climate portfolio is a step forward but remains the highest‑fee U.Fund option and is static rather than age‑based.
Alan Field, a Winchester retiree who testified, described joining grassroots work to persuade MEFA and Fidelity to add a climate option and said H.3206 would give families the legal certainty to invest by value without losing the state tax benefit.
MEFA and Fidelity were described as having had multiple conversations with legislators and advocates; testimonies noted Fidelity created a “climate action” portfolio for Massachusetts late last year but that gaps remain, especially fees and fund structure.
No formal action was taken Wednesday; the committee heard testimony and solicited written submissions.
Supporters urged a narrow approach: keep the existing deduction but expand the list of qualifying plans to include out‑of‑state, low‑fee, fossil‑fuel‑free accounts when an equivalent U.Fund option is not available.
If adopted, proponents said, the change would let families align college savings with state climate goals without altering MEFA’s discretion to offer or not offer particular funds.
