Is Florida tax free? Not quite, but close enough on the taxes most people care about: the state collects no personal income tax and no estate or inheritance tax, and it caps how fast your home’s assessed value can rise once you claim it as your residence. What Florida does collect, and collects aggressively, are sales taxes, property taxes, and one-time taxes on real estate transactions that catch newcomers off guard.
What Florida Does Not Tax
Article VII, Section 5 of the Florida Constitution has operated as a complete ban on personal income tax since 1924, and no Florida legislature has ever tried to impose one.1Florida Senate. The Florida Constitution Wages, Social Security benefits, pension distributions, capital gains, and investment income are all free from state-level tax.
The savings scale with income. A household earning $300,000 that moves from a state with a 5% income tax keeps roughly $15,000 a year just by changing residence. That math is the reason Florida attracts retirees drawing down large retirement accounts and remote workers paid by out-of-state employers.
Florida also imposes no estate tax on anyone who died on or after January 1, 2005, and no inheritance tax at all.2Florida Department of Revenue. Estate Tax A statute technically imposes one, but it was tied to a federal credit that disappeared in 2004, so the amount Florida can actually collect is zero.3Florida Senate. Florida Code 198.02 – Tax Upon Estates of Resident Decedents For anyone moving from one of the roughly dozen states that still charge their own estate or inheritance tax, that layer vanishes entirely.
What You Pay Instead: Sales Tax
Florida’s general sales tax rate is 6%.4Florida Department of Revenue. Florida Sales and Use Tax Most counties add a discretionary surtax between 0.5% and 2%, pushing the combined rate as high as 8% depending on where you shop.5Florida Department of Revenue. Florida Consumer Information The county portion generally applies only to the first $5,000 of any single item.
Groceries for home consumption, prescription medications, and certain medical devices are exempt.6Florida Senate. Florida Code 212.08 – Sales, Rental, Use, Consumption, Distribution, and Storage Tax; Specified Exemptions The state also runs periodic sales tax holidays, including a back-to-school window in August and a now-permanent disaster preparedness exemption covering batteries, generators, fire extinguishers, and smoke detectors year-round. The specific items and price caps shift year to year, so check the Florida Department of Revenue’s current list before any large purchase.
One tax that surprises newcomers is the communications services tax, which replaces regular sales tax on phone service, cable, and streaming video. The combined state rate is 7.44%, with local jurisdictions adding more on top.7Florida Department of Revenue. Florida Communications Services Tax Residential phone service gets a partial break; video services pay the full rate. Internet access is fully exempt.
Property Taxes and the Homestead Trade-Off
Florida funds much of its local government through property taxes, but it gives homeowners two significant breaks if they make a Florida property their permanent residence.
The homestead exemption removes up to $50,000 from your home’s taxable value. The first $25,000 applies to all property taxes, including school district taxes. An additional $25,000 applies only to non-school taxes on the assessed value between $50,000 and $75,000.8Florida Senate. Florida Code 196.031 – Exemption of Homesteads On a home assessed at $300,000, the exemption saves roughly $750 to $1,000 a year depending on local millage rates.
You have to apply by March 1 of the tax year, filing Form DR-501 with your county property appraiser.9Florida Department of Revenue. Property Tax Information for Homestead Exemption Miss that deadline and you lose the exemption for the entire year with no retroactive claim.
The Save Our Homes Cap
Potentially more valuable than the exemption is the Save Our Homes assessment cap. After your first year with a homestead exemption, your property’s assessed value cannot increase by more than 3% or the change in the Consumer Price Index, whichever is lower.10Florida Department of Revenue. Save Our Homes Assessment Limitation and Portability During periods of rapid real estate appreciation, long-time homeowners end up with assessed values well below what new buyers face. The cap applies to assessed value, not the tax rate, so your bill can still rise if local governments increase millage rates.
When a property changes hands, the assessed value resets to full market value and the new owner starts over. Florida softens this through portability: if you sell your homesteaded property and buy a new one in Florida, you can transfer your accumulated assessment savings. You must establish a homestead exemption on the new property within three years of January 1 of the year you gave up the old one, and you file Form DR-501T with your homestead application by March 1.10Florida Department of Revenue. Save Our Homes Assessment Limitation and Portability If the new home costs more than the old one, the full dollar amount of your savings transfers. If it costs less, the savings are prorated.
Taxes When You Buy a Home
Two one-time taxes hit every Florida real estate transaction and often surprise first-time buyers.
The documentary stamp tax is $0.70 per $100 of the sale price every time real property changes hands.11The Florida Legislature. Florida Statutes Chapter 201 On a $400,000 home, that’s $2,800. Miami-Dade County is the exception, charging a base rate of $0.60 per $100 for single-family residences, with other property types paying an additional $0.45 surtax per $100.12Florida Department of Revenue. Documentary Stamp Tax Mortgages and promissory notes carry a separate documentary stamp rate of $0.35 per $100.
On top of that, when you take out a mortgage on Florida real property you owe a one-time nonrecurring intangible tax of 2 mills (0.2%) on the amount secured by the property.13Florida Department of Revenue. Nonrecurring Intangible Tax On a $320,000 mortgage, that’s $640. The tax also applies to home equity lines of credit, but once you’ve paid on the full line amount, no additional tax is owed on later draws.
Taxes on Businesses
Florida’s business tax picture is favorable, though not as clean as its personal tax picture. Corporations pay a 5.5% corporate income tax on net income earned in Florida, with the first $50,000 exempt.14The Florida Legislature. Florida Statutes 220.11 – Tax Imposed The 5.5% rate has been stable since 2022.15Florida Department of Revenue. Tax and Interest Rates
The real advantage is for pass-through entities. S-corporations, LLCs, and partnerships don’t pay the corporate income tax; profits flow through to owners’ personal returns, where Florida’s zero rate means no state tax is owed at all.16Florida Senate. Florida Statutes Chapter 220 – Income Tax Code A sole proprietor netting $200,000 in a state with a 5% income tax would owe $10,000 to the state. In Florida, zero.
Businesses do owe annual tangible personal property tax on physical assets like furniture, equipment, and machinery, with a $25,000 exemption per return.17Florida Senate. Florida Code 196.183 – Exemption for Tangible Personal Property You still file a return under the threshold, but you won’t owe. Employers also pay the reemployment tax (Florida’s unemployment insurance), starting at 2.7% on the first $7,000 of each employee’s wages for new employers, then adjusting between 0.1% and 5.4% based on claims history.18Florida Department of Revenue. Reemployment Tax Rate Information
You Have to Actually Become a Florida Resident
None of the income tax benefit kicks in until you’re a legal Florida resident, and your former state will not just take your word for it. States with income taxes routinely audit people who claim to have moved, looking for evidence the move was genuine.
Florida Statute 222.17 lets you file a Declaration of Domicile, a sworn statement submitted to the clerk of the circuit court in your county declaring Florida as your permanent home.19Justia Law. Florida Code 222.17 – Manifesting and Evidencing Domicile in Florida It matters most if you keep a second home elsewhere, because it creates an official record of your intent. Beyond that:
- Get a Florida driver’s license and register your vehicles in Florida.
- Register to vote at your Florida address.
- Update your estate planning documents to reflect Florida as your domicile.
- Use your Florida address on bank accounts, tax returns, and professional licenses.
Former states look at where you spend most of your time, where your doctors and social ties are, and which address appears on your financial accounts. Buying a Florida home and filing the declaration is not enough if you still spend seven months a year in New York. Aggressive states have been known to check cell phone records and credit card transactions to prove a taxpayer was physically present for more than 183 days.
Federal Taxes Still Apply
The biggest misconception about Florida is that “no state income tax” means “no income tax.” Federal income tax, Social Security tax (6.2% of wages up to the annual cap), and Medicare tax (1.45% of all wages, plus an additional 0.9% above $200,000 for single filers) apply to every Florida resident exactly as they do everywhere else. Florida’s constitutional prohibition only reaches state-level taxation.
Federal estate tax also still applies to large estates. The federal exemption is high enough that most people never owe it, but estates above the threshold face a top rate of 40% regardless of state. Florida’s lack of a state estate tax removes one layer, but anyone with a taxable estate above the federal threshold still needs serious planning.