How Do I Report My 529 Plan on My Massachusetts Return?

If you contributed to a Massachusetts 529 college savings plan during the tax year, you may qualify for a Massachusetts income tax deduction.

Massachusetts offers a deduction for contributions made to a qualified Massachusetts 529 plan, including the U.Fund College Investing Plan. Contributions are reported as a deduction on your Massachusetts return.

What Is a 529 Plan?

A 529 plan is a tax-advantaged education savings account designed to help families save for future education expenses.

In Massachusetts, the state's 529 plan is called the U.Fund. Funds can be used for qualified education expenses at eligible colleges, universities, vocational schools, and certain K-12 institutions.

Qualified expenses generally include:

• Tuition
• Required fees
• Books
• Supplies
• Required equipment
• Room and board for students attending at least half-time

Earnings grow tax-deferred, and qualified withdrawals are generally tax-free.

What Is the Massachusetts Deduction?

Massachusetts allows a deduction for contributions made to a Massachusetts prepaid tuition program or college savings plan.

For the 2026 tax year, the deduction is limited to:

• $1,000 for Single, Married Filing Separately, and Head of Household filers
• $2,000 for Married Filing Jointly filers

The deduction applies only to contributions made during the tax year.

Massachusetts reports this deduction on Schedule Y as a Prepaid Tuition or College Savings Plan Deduction.

What Can 529 Funds Be Used For?

Qualified withdrawals may be used for:

• Undergraduate education
• Graduate education
• Certificate programs
• Vocational programs
• Eligible colleges and universities participating in federal student aid programs

In addition, up to $10,000 per year, per beneficiary may be used for K-12 tuition expenses.

What About Rollovers and Beneficiary Changes?

529 accounts are flexible.

You can generally:

• Change the beneficiary to another eligible family member
• Roll funds into another qualified 529 plan
• Transfer funds between qualifying family members without triggering tax consequences if the transfer meets federal and state requirements

What Happens if the Money Isn't Used for Education?

If funds are withdrawn for non-qualified purposes:

• Earnings may become taxable
• A federal penalty may apply
• Massachusetts may require recapture of previously claimed deductions

Massachusetts specifically provides that the deduction is subject to recapture if distributions or refunds are used for reasons other than:

• Qualified higher education expenses
• The beneficiary's death
• The beneficiary's disability
• Receipt of a qualifying scholarship

Where Do I Enter My 529 Contribution in the Program?

To enter your Massachusetts 529 deduction:

1. State
2. Massachusetts Return
3. Deductions
4. Prepaid Tuition or College Savings Plan Deduction

Enter the amount contributed during the tax year. The software will calculate the allowable deduction based on your filing status and Massachusetts limits.

Important Notes

• The deduction is available only for contributions to a qualifying Massachusetts prepaid tuition or college savings plan.
• The maximum deduction is $1,000 for Single, Head of Household, and Married Filing Separately filers and $2,000 for Married Filing Jointly filers.
• Unused deductions do not carry forward to future years.
• Keep records of contributions and distributions with your tax documents.
• If funds are withdrawn for non-qualified purposes, part of the deduction may need to be added back to income in a future year.