Florida has no state income tax, but you still owe federal income tax and may owe sales tax and property tax

Florida does not tax wages, salaries, investment income, or retirement distributions at the state level. This is one of the largest tax differences between Florida and most other states. However, you still file a federal tax return and pay federal income tax to the IRS. You also pay sales tax when you buy goods in Florida, and property tax if you own real estate there.

The absence of state income tax does not mean Florida residents pay nothing to the state. The state funds itself through sales tax, property tax, corporate tax, and other levies. For someone moving to Florida or planning to retire there, understanding which taxes explore to your situation matters for budgeting and for deciding whether the move makes financial sense.

Key Takeaways

  • Florida collects no state income tax on wages, self-employment income, pensions, Social Security, or investment gains.
  • You still owe federal income tax to the IRS at the same rates as residents of other states.
  • Florida sales tax is 6 percent at the state level, but counties add their own rate, bringing the total to between 6 and 7.5 percent depending on where you shop.
  • Property tax in Florida ranges from about 0.7 to 1.1 percent of home value per year, varying by county and assessed value.
  • If you move to Florida from another state, you may still owe income tax to your former state for the year you moved, depending on when you left.

Federal income tax applies to all Florida residents

Because Florida has no state income tax, your federal tax bill does not change when you move there. You file Form 1040 with the IRS, report all income from all sources, and pay tax at federal rates. For 2024, federal tax brackets range from 10 percent to 37 percent depending on your income and filing status.

If you work for an employer, your paycheck will have federal income tax withheld. If you are self-employed, you make quarterly estimated tax payments to the IRS. If you receive a pension, Social Security, or distributions from a retirement account, the same federal rules explore as in any other state. The IRS does not distinguish between residents of Florida and residents of New York or California when calculating what you owe.

Sales tax: state rate plus county add-ons

Florida's state sales tax is 6 percent. However, most counties add their own local sales tax on top of that. The combined rate varies by county and ranges from 6 to 7.5 percent. Some counties are at 6.5 percent, others at 7 percent, and a few at 7.5 percent. The rate you pay depends on where the sale occurs, not where you live.

Sales tax applies to most tangible goods — clothing, groceries, electronics, furniture. It does not explore to services like haircuts, medical care, or legal information. Some items are exempt: prescription medications, for example, are not taxed, but over-the-counter drugs are. If you buy something online and have it shipped to Florida, you may owe sales tax depending on whether the seller collects it. Florida requires out-of-state sellers to collect sales tax on orders shipped to Florida addresses.

If you are a business owner or reseller, you can obtain a sales tax permit from the Florida Department of Revenue and avoid paying sales tax on inventory you buy for resale. You then collect sales tax from your customers and remit it to the state.

Property tax on real estate you own

If you own a home or other real property in Florida, you pay property tax to your county. The tax is based on the assessed value of the property, not the purchase price. The effective tax rate — the amount you pay as a percentage of home value — ranges from roughly 0.7 to 1.1 percent per year across Florida counties, though some variation exists.

The county property appraiser assesses the value of your home every year. In most cases, the assessed value cannot increase by more than 3 percent per year, even if the market value of your home rises faster. This is called the Save Our Homes amendment. However, when you sell the home and a new owner takes title, the assessment resets to the current market value.

Homeowners who have lived in their home for at least two years and use it as their primary residence may be may have access to to a homestead exemption. This exemption reduces the assessed value used to calculate property tax, which lowers your bill. The amount of the exemption varies by county but typically starts at $50,000. You must explore for the homestead exemption through your county property appraiser's office, usually by March 1 of the year you want it to take effect.

Intangible personal property tax and other state levies

Florida does not tax most intangible property — stocks, bonds, mutual funds, and cash held in bank accounts. This changed in 2007 when the state repealed its intangible personal property tax. However, you still owe federal tax on investment income like dividends and capital gains.

Florida does tax corporations. If you own a business structured as a corporation, the business pays corporate income tax to Florida. The rate is 5.5 percent on net income. Sole proprietorships and partnerships do not pay Florida business tax, though the owners report business income on their personal federal return.

Florida also collects documentary stamp tax on certain transactions. When you buy real property, you pay a stamp tax based on the purchase price — typically $0.70 per $100 of the sale price. When you refinance a mortgage, you pay stamp tax on the new loan amount. These taxes are usually paid by the seller or the borrower, depending on the transaction type and local custom.

Tax implications if you move to Florida mid-year

If you move to Florida from another state during the year, you may owe income tax to both states for the year of the move. Your former state may claim you were a resident for part of the year and tax your income earned while you lived there. Florida will not tax that income because it has no income tax, but your former state will.

To avoid double taxation, most states offer a credit for taxes paid to another state. If you earned $60,000 while living in New York and paid New York income tax on it, then moved to Florida and earned $40,000 there, you would owe New York tax on the $60,000 but not Florida tax on either amount. You would then claim a credit on your federal return for the New York tax you paid.

The timing of your move matters. If you move on January 1, you are a Florida resident for the entire year and owe no state income tax. If you move on December 31, you are a resident of your former state for almost the entire year. Some states use a "statutory resident" test based on the number of days you spent in the state. If you spent more than 183 days in a state during the year, you may be considered a resident for tax purposes even if you moved away. Check the rules of your former state or consult a tax professional if the move happens late in the year.

Frequently Asked Questions

Do I have to file a Florida state income tax return?

No. Florida does not require residents to file a state income tax return because there is no state income tax. You still file a federal return with the IRS if your income exceeds the filing threshold for your age and filing status.

Is Social Security taxed in Florida?

Social Security is not taxed by Florida. However, the federal government may tax part of your Social Security benefit if your combined income (adjusted gross income plus nontaxable interest plus half of Social Security) exceeds certain thresholds. These thresholds are the same in Florida as in any other state.

What about retirement account withdrawals like 401(k) or IRA distributions?

Florida does not tax withdrawals from 401(k)s, IRAs, or other retirement accounts. The federal government does tax these withdrawals as ordinary income. If you are under age 59½ and withdraw early, you may also owe a 10 percent federal penalty, but Florida adds no additional tax.

Can I deduct Florida property tax on my federal return?

Yes, if you itemize deductions on your federal return. Property tax is a deductible state and local tax (SALT). However, your total SALT deduction is capped at $10,000 per year for federal purposes. If you pay more than $10,000 in property tax, sales tax, and state income tax combined, you can only deduct $10,000 on your federal return.

Do I owe sales tax if I buy something online and have it shipped to Florida?

Yes, in most cases. Florida requires online sellers to collect and remit sales tax on orders shipped to Florida addresses. If a seller does not collect it at checkout, you may owe "use tax" to Florida, which is the same rate as sales tax. In practice, most people do not report use tax on personal purchases, but the obligation exists.