Florida has never levied a personal income tax, and the history of state income tax in Florida is essentially the story of a 1924 constitutional ban and the revenue tools lawmakers built around it. Voters that year approved an amendment prohibiting any tax on the income of residents, and every major change to the state’s tax code since has had to work around that prohibition rather than through it.
Why Florida Banned the Income Tax in 1924
Florida’s choice to shut the door on income taxation came during the 1920s land boom. Northern investors and wealthy retirees were moving south in large numbers, and state leaders saw a chance to lock in that migration by guaranteeing a tax advantage no other state could easily match. The legislature placed a constitutional amendment on the ballot in 1924 that would prohibit both personal income taxes and inheritance taxes outright.
Voters approved it with roughly 80 percent in favor. The original language left no room for interpretation: “No tax upon inheritances or upon the income of residents or citizens of this state shall be levied by the State of Florida, or under its authority.” That provision became Article IX, Section 11 of the old state constitution.
How the Ban Carried Into the Modern Constitution
When Florida rewrote its constitution in 1968, the income and inheritance tax ban moved into the new document as Article VII, Section 5. The wording was adjusted in anticipation of a coming debate over corporate taxation, but the protection for individuals held. Under the current text, any tax on the income of “natural persons” cannot exceed “the aggregate of amounts which may be allowed to be credited upon or deducted from any similar tax levied by the United States or any state.”1Florida Senate. The Florida Constitution That formula has never produced a figure large enough to justify building a collection system around, so the personal rate has stayed at zero.
The inheritance tax piece functions the same way. The state can only tax estates up to an amount creditable dollar-for-dollar against a federal estate tax, a constraint that eventually erased Florida’s estate tax altogether.
The Sales Tax Fills the Gap
Property taxes and licensing fees carried the state through its first century, but by the late 1940s population growth was outpacing what those sources could bring in. Florida adopted a general sales tax in 1949 at a rate of 3 percent.2Florida Department of Revenue. History of Local Sales Tax and Current Rates
The rate climbed in steps: 4 percent in 1968, 5 percent in 1982, and 6 percent in 1988, where it has stayed.2Florida Department of Revenue. History of Local Sales Tax and Current Rates Counties can add local surcharges on top of the state rate, so the combined rate in some areas runs higher.
The sales tax became the backbone of state finance. More than 80 percent of total state tax collections now come from sales taxes and gross receipts, a far heavier reliance on consumption than you see in states that also tax income. The tradeoff is that Florida’s revenue is more sensitive to swings in consumer spending.
The 1971 Corporate Income Tax
By the early 1970s, Florida was struggling to fund schools and social services on property and sales tax revenue alone. Governor Reubin Askew pushed for a corporate income tax as a way to close the gap without touching the personal income tax ban.3Florida Department of State. Reubin O’Donovan Askew Because even corporate income taxation was restricted under the existing constitution, the change required a voter-approved amendment.
The amendment passed in 1971, and the revised Article VII, Section 5 drew a clear line between individuals and businesses. The ban on taxing “natural persons” stayed intact. Corporations and other non-natural entities could be taxed at up to 5 percent of net income, with a higher rate possible on a three-fifths vote of each legislative chamber.1Florida Senate. The Florida Constitution
The current corporate rate sits at 5.5 percent, which means the legislature cleared that supermajority at some point.4Florida Department of Revenue. Florida Department of Revenue – Corporate Income Tax The calculation starts from federal taxable income, applies state-specific adjustments, and exempts the first $50,000 of net income.5Florida Senate. Florida Statutes 220.14 – Exemption That exemption leaves many smaller businesses with no liability at all.
The Intangible Personal Property Tax and Its Repeal
For decades, Florida did tax something close to income: investment holdings. The intangible personal property tax was an annual levy on stocks, bonds, mutual funds, and similar financial assets, assessed at $0.50 per $1,000 of market value as of January 1 each year. An exemption of $250,000 for individuals and $500,000 for married couples meant the tax mostly reached wealthier investors.
It covered a wide range of instruments, including corporate stocks, out-of-state government bonds, accounts receivable, and shares in mutual funds and private businesses. By the mid-2000s, critics argued the tax discouraged investment and clashed with the state’s low-tax image. In 2006, the legislature repealed the annual intangible tax effective January 1, 2007, striking down Part I of Chapter 199.6Florida Senate. HB 209 CS Annual Intangible Personal Property Tax Analysis Two narrower taxes survived: a one-time tax on mortgages and liens recorded against real property, and a tax on government-owned property leased to private entities.
The Estate Tax That Vanished With a Federal Credit
The 1924 amendment banned inheritance taxes, but for decades Florida still collected death-tax revenue through a mechanism known as the “sponge tax” or “pickup tax.” Federal law allowed taxpayers to credit state estate taxes against their federal estate tax bill. Florida set its state-level estate tax at exactly the amount of that federal credit, pulling in revenue that would otherwise have gone to Washington without adding any burden on the estate itself.
It was lucrative. By the late 1990s, Florida was taking in roughly $800 million a year through the pickup tax, with projections above $1 billion. The arrangement stayed within constitutional limits because the state tax never exceeded what was “creditable against the federal tax on a dollar for dollar basis,” as Article VII, Section 5 requires.1Florida Senate. The Florida Constitution
Then Congress eliminated the credit. The Economic Growth and Tax Relief Reconciliation Act of 2001 phased it out, cutting it to 75 percent in 2002, 50 percent in 2003, and 25 percent in 2004. By January 1, 2005, the credit was gone, replaced with a less valuable deduction. Florida’s estate tax was mathematically tied to the credit, so it dropped to zero at the same moment.7Florida Department of Revenue. Estate Tax
Other states responded by enacting standalone estate taxes. Florida’s constitution prevents that. The state can only tax estates up to the creditable amount, and nothing is left to credit. Unless Congress revives the state death tax credit, Florida’s estate tax stays at zero no matter what the legislature wants.
The 2018 Supermajority Lock
The most recent change came in November 2018, when voters approved Amendment 5 with about 66 percent support. It added Article VII, Section 19, requiring a two-thirds vote of each legislative chamber to impose any new state tax or fee, or to raise an existing one.1Florida Senate. The Florida Constitution
The amendment’s definition of “raise” is broad. It covers increases in rate, and it also covers eliminating or reducing an existing exemption or credit. Shrinking a tax break counts as a tax increase under this rule, which locks in many current carveouts alongside the rates. Every tax or fee change must also travel in its own standalone bill, blocking lawmakers from folding increases into larger legislation.
The supermajority requirement applies only to state-level taxes and fees. Counties, municipalities, school boards, and special districts can still adjust their own taxes and fees through their normal processes.
The layers of constitutional protection stack up. The 1924 ban blocks personal income and inheritance taxes. The 1971 amendment caps the corporate rate unless a supermajority agrees to raise it. The 2018 amendment extends that supermajority rule to every state tax and fee. For anyone counting on Florida’s tax structure holding its shape, the constitutional math leans heavily in that direction.