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4 Important Tax Benefits of Florida 529 Plans

Securing your journey to higher education is easy with a Florida 529 savings plan, but did you know that you can qualify for additional tax benefits? The experts at Maggi Tax are here to give you a refresher on how a Florida 529 Plan works and introduce you to tax benefits that can assist you with your schooling expenses!

What Is The Florida 529 Plan?

Like a retirement fund, the Florida 529 Plan is a savings account to which you can make contributions for higher education expenses like tuition, transportation, food, books, and other learning materials. Many parents open up an account for their future college students as an easy and accessible way to secure the funds they need to succeed.

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Going with the Florida 529 Plan is already a great start to a bright future, but there are additional tax benefits that can be overlooked if you don’t know to keep an eye out for them:

1) Florida 529 Plan Tax Benefits Worth Looking Into

Much of Florida’s tax benefits come from the fact that residents aren’t subject to state income tax. That means many of the contributions that you make to any savings account, including the Florida 529 Plan, are exempt from taxes as long as you go about it the right way. Let’s take a look at some of the specific ways you can save on taxes with a higher education savings account:

2) Annual Gift Tax Is Excluded

Monetary gifts are tax-free as long as they are under $17k per year. For couples, the gifting allowance is doubled to $34k. Monetary gifts that are contributed to a Florida 529 Plan are excluded from annual gift taxes.

3) Become Eligible For 5-Year Gift Tax Averaging

Contributions to a Florida 529 Plan don’t need to stay under the threshold to qualify for benefits. Even if a contribution exceeds the $17k/$34k limit, it can still be calculated under the 5-year gift tax average which can increase your limit up to $85k (or $170k jointly).

4) Educational Distributions Are Tax-Free

Regardless of the contribution’s status as a gift or non-gift, tuition and other educational expenses are typically tax-free. This is true for K-12 schooling and qualified college institutions.

5) Your Earnings Are Tax-Deferred

You don’t have to worry about being taxed on any unearned income you make from compounding interest in your Florida 529 Plan. Having a tax-deferred savings account for educational expenses encourages parents and future college students to start saving early to collect the maximum amount of tax-free earnings.

When Should I Start My Florida 529 Plan?

Since tax-free interest compounds, it’s best to begin your or your child’s Florida 529 Plan as soon as you are able. Likewise, there is no deadline for starting. If you feel like it’s too late, it’s not. Some people don’t start saving until their final year of high school, but that’s still better than having no savings at all.

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Make The Most Of Florida’s Tax Benefits, Call Maggi Tax Today!

The Florida 529 Plan has the potential to bring in extra earnings in a number of ways, and we’re here to help you navigate the possibilities with our profound knowledge and skills. Contact Maggi Tax today at (727) 799-1701 to schedule a consultation for our tax services and to strategize the best plan for your higher education funds!


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