Tax in Florida: a complete guide
This guide to taxes in Florida explores everything from corporate income tax to potential tax requirements in retirement.
Florida has one of the lowest overall tax burdens of any US state, making it a good option if you’re hoping to reduce your tax liability. But it’s also important to remember that not all taxes are created equal, and the state collects in various ways.
Whether you’re one of the 21 million Americans currently living in Florida or a hopeful future Floridian looking to relocate to this sunny east coast state, tax comprehension is essential. Tax can have a massive impact on the viability and affordability of a decision, from a property purchase to an interstate move.
Florida income tax
Though tax on corporate income is charged at a flat rate of 5.5 percent in Florida, there is no state tax on personal income.
Your primary tax liability in Florida, provided you don’t run a corporation, will be abiding by federal tax laws and paying taxes at a rate following your household size and income bracket:
|Federal income tax rate||A single person OR a married person/ registered domestic partner filing separately||A married person/ registered domestic partner filing jointly OR a qualifying widower||A head of household|
|10 percent||$0 to $11,000||$0 to $22,000||$0 to $15,700|
|12 percent||$11,001 to $44,725||$22,001 to $89,450||$15,701 to $59,850|
|22 percent||$44,726 to $95,375||$89,451 to $190,750||$59,851 to $95,350|
|24 percent||$95,376 to $182,100||$190,751 to $364,200||$95,351 to $182,100|
|32 percent||$182,101 to $231,250||$364,201 to $462,500||$182,101 to $231,250|
|35 percent||$231,251 to $578,125||$462,501 to $693,750||$231,251 to $578,100|
|37 percent||$578,126 or more for single people, $346,876 or more for married people/domestic partners filing separately||$693,751 or more||$578,101 or more|
Florida sales tax
The average combined state and local sales tax in Florida is 7.02 percent.
The state sales tax is charged at a flat rate of six percent, but it can end up as high as eight percent for the consumer depending on the city, county, and local taxes that apply on top of the state-wide amount. There is, however, a $5,000 limit on these additional taxes for things like boats, aircrafts, vehicles, and mobile homes.
Most things you’ll purchase in Florida will be taxed, with groceries and prescription drug exemptions. While groceries are exempt from tax, alcoholic beverages are not. Sales tax on alcohol in Florida is charged as follows:
Beer is taxed at $0.48 per gallon.
Wine is taxed between $2.25 and $3.50 per gallon (depending on the alcohol percentage and whether the wine is sparkling).
Liquor is taxed between $2.25 and $9.53 per gallon (depending on the alcohol percentage).
If you’re curious about whether a particular item is non-taxable in Florida, you’ll find a comprehensive, up-to-date list of exemptions on the Department of Revenue’s website. New exemptions are introduced regularly, and there are sometimes sales tax holiday periods to take advantage of if you choose to. For instance:
May 27 to June 9, 2023, and August 26 to September 8, 2023 – Two disaster-preparedness supplies sales tax holidays.
May 29 to September 4, 2023 – The “Florida Freedom Summer” sales tax holiday for admissions to events/assorted camping, fishing, and general outdoor supplies.
July 24 to August 6, 2023, and January 1 to January 14, 2024 – Two back-to-school sales tax holidays for clothing, learning aids, computers, and school supplies
Florida property tax
If you’re looking to buy a property in Florida, you’ll need to consider all the associated costs, including the additional property tax expense. The state’s average property tax rate is 0.98 percent, below the US average of 1.08 percent.
In Florida, property taxes are set by local county, city, and district governments, with all the tax money going directly to those governments. These local governments usually charge property tax according to the “millage rate.” One “mill” equates to a dollar of tax for every $1,000 of value in your home, so if a county charges five mills as their millage rate, you’ll be paying $5 in tax for every $1,000 of value in your home.
This can be difficult to get your head around initially. If you’re feeling confused about your potential property tax obligations in Florida, discussing real estate taxes with a financial advisor can be beneficial.
Florida estate tax
Understanding the ins and outs of death taxes is never the nicest of topics, whether you’re aware you’ll soon receive an inheritance or planning for your passing. But it’s essential. Inheritance and estate taxes can considerably impact the amount of money gifted parties receive.
Suppose your estate is larger than $12.92 million for an individual or $25.84 million for a married couple. In that case, you’ll have federal estate tax to pay regardless of your place of residence in the US. In Florida, though, you won’t need to account for any taxes beyond this, as there is no state inheritance or estate tax.
However, you will still need to pay estate tax for properties in other states with different laws. For instance, you’ll have to pay it on a property in Connecticut, which charges an estate tax.
Florida motor tax
The six percent sales tax and accompanying local taxes cover Florida car purchases for both used and new vehicles.
The exact amount you’ll need to pay in vehicle tax depends on where you live and what you buy. Plus, if you purchase a car out of state, you must familiarize yourself with that state’s motor tax laws.
As briefly mentioned above, local sales taxes charged in addition to the six percent can only apply to the first $5,000 of the total purchase price of a vehicle.
You’ll also, of course, be taxed on gasoline in Florida, which might be something you’d like to account for. Aviation and jet fuel are taxed at $0.0427 per gallon, undyed diesel at $0.202 per gallon, and gasoline at $0.35225 per gallon.
Florida retirement tax
Ranked one of the best states to retire to on a fixed income, Florida is considered relatively financially friendly for older people.
Florida has no state income tax, meaning Social Security retirement benefits, withdrawals from retirement accounts, pension income, and any income from an IRA or 401(k) is all untaxed.
Whether you’re planning to retire to the Sunshine State or making a career move that could take you there, you should now have a clear sense of whether Florida suits you from a tax perspective. A financial advisor can help you handle all your tax queries and ensure you’re not paying more tax than needed.
Senior Content Writer
Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.