SECTION 1. Paragraph (1) of subsection (a) of section 2 of chapter 62 of the General Laws, as appearing in the 2016 Official Edition, is hereby amended by adding the following subparagraph:-

(J) Amounts withdrawn from an account in a prepaid tuition program or college savings program established by the commonwealth or an instrumentality or authority of the commonwealth, referred to here as a “529 account”, to pay for expenses associated with enrollment or attendance at an elementary or secondary school that are attributable to: (i) amounts expended for the purchase of an interest in or amounts contributed to such 529 account for which the deduction in paragraph (19) of subsection (a) of part B of section 3 was allowed in a previous taxable year; or (ii) earnings and gains on such 529 account not included in federal gross income under section 529 of the Code, as amended and in effect for the taxable year. For the purposes of this section, such withdrawals shall be attributed first to the earnings and gains on a 529 account not included in federal gross income under said section 529 of the Code, then to the aggregate of all amounts contributed to a 529 account for which the deduction in paragraph (19) of subsection (a) of part B of section 3 was allowed in a previous taxable year, and then finally to contributions that have already been taxed under this chapter.

SECTION 2. Section 3 of said chapter 62, as so appearing, is hereby amended by inserting after the words “26 U.S.C. 529(e)(3)”, in lines 202 and 203, the following words:- ; provided, however, that “qualified higher education expenses” shall not include an expense associated with enrollment or attendance at an elementary or secondary school.