A pass-through tax in Florida is the federal treatment that lets a business skip paying income tax at the entity level and instead pass profits directly to its owners, who report that income on their personal federal returns. Because the Florida Constitution forbids a personal income tax, pass-through earnings that reach a Florida resident face only federal tax. There is no second layer waiting for them at the state line. That is the headline, and it is the reason so many owners structure their businesses here, but it is not the whole picture: Florida still has filing obligations, a corporate income tax that can be triggered by a classification slip, and the federal self-employment tax does not care which state you live in.
Which Florida Businesses Qualify
Several structures route income straight to their owners.
Sole proprietorships and general partnerships are the simplest. The IRS already treats a sole proprietor and the business as one taxpayer. Florida does not require general partnerships to register with the state, though a partnership may file a statement of partnership authority with the Department of State to formalize who can sign documents and transfer real property on the partnership’s behalf.1Florida Senate. Florida Statutes 620.8303 – Statement of Partnership Authority
Limited Liability Companies formed under Chapter 605 combine pass-through taxation with personal liability protection. By default, a multi-member LLC is classified as a partnership for federal tax purposes and a single-member LLC is disregarded as a separate entity from its owner. Either way, the LLC itself owes no Florida corporate income tax as long as it keeps that default classification.2Florida Senate. Florida Statutes 605.1103 – Tax Exemption on Income of Certain Limited Liability Companies
S-Corporations qualify too, but only after an affirmative election with the IRS on Form 2553. To be eligible, a corporation must be domestic, have no more than 100 shareholders, allow only individual shareholders (with narrow exceptions for certain trusts and tax-exempt organizations), have no nonresident alien shareholders, and have a single class of stock.3Office of the Law Revision Counsel. 26 USC 1361 – S Corporation Defined For calendar-year businesses, Form 2553 is due by March 15 of the year the election should take effect, or any time during the prior tax year. Once in place, the election passes income, losses, deductions, and credits through to shareholders rather than taxing them at the corporate level.
C-Corporations are the main structure that does not qualify. They pay corporate income tax at the entity level, and their shareholders pay again on dividends.
Why Florida’s No Personal Income Tax Matters Here
The Florida Constitution prohibits the legislature from taxing the income of natural persons. In a state like California or New York, pass-through income that lands on your personal return faces a state income tax on top of federal. In Florida, it does not. Your pass-through earnings hit your federal return and stop there.
Federal tax still applies to every dollar. Business profits get added to any wages, investment income, and other earnings you have, and the total is taxed under the regular federal brackets. The practical benefit of Florida’s policy is simply the state tax you would otherwise owe, which for high-income owners in states with top rates above 10% can be substantial.
When Florida’s Corporate Income Tax Can Still Apply
Florida imposes a corporate income tax at 5.5% of net income on C-Corporations and entities taxed as corporations.4Florida Legislature. Florida Statutes 220.11 – Tax Imposed Pass-through entities avoid this tax because Florida follows the federal classification. If the IRS treats your business as a partnership, disregarded entity, or S-Corporation, Florida does the same.2Florida Senate. Florida Statutes 605.1103 – Tax Exemption on Income of Certain Limited Liability Companies
One wrinkle for S-Corporations: although they generally owe no Florida corporate income tax, an S-Corporation must still file Florida Form F-1120 for any year in which it has a federal tax liability. That can happen with built-in gains from a C-to-S conversion or with excess passive investment income. A single-member LLC that is disregarded for both federal and Florida purposes does not need to file a separate F-1120, though a corporate parent must report the LLC’s income on its own return.5Legal Information Institute. Florida Administrative Code 12C-1.022 – Returns Filing Requirement
The point to hold onto: if your LLC elects corporate taxation, or your S-Corp loses its election by breaking one of the eligibility rules, you owe Florida’s 5.5% corporate tax on top of whatever federal fallout comes next. Preserving your entity’s classification matters more in Florida than people realize, precisely because losing it switches on a tax that otherwise would not exist.
The Federal Taxes You Still Owe
Income Tax at Your Personal Rate
All pass-through profits are taxed on your personal Form 1040 at ordinary federal rates. Nothing about Florida residency changes the federal bill.
Self-Employment Tax
The absence of a state income tax can distract Florida owners from the federal self-employment tax, which can be a bigger line than they expect. If your net self-employment earnings exceed $400 in a year, you owe self-employment tax covering both the employer and employee portions of Social Security and Medicare.6Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes)
The combined rate for 2026 is 15.3%: 12.4% for Social Security and 2.9% for Medicare. Social Security applies only to the first $184,500 of combined wages and self-employment income in 2026.7Social Security Administration. Contribution and Benefit Base Medicare has no cap, and once your self-employment income combined with any wages exceeds $200,000 for single filers or $250,000 for joint filers, an additional 0.9% Medicare surtax kicks in.8Internal Revenue Service. Questions and Answers for the Additional Medicare Tax
Who owes it depends on the entity. Sole proprietors and general partners pay self-employment tax on their share of business earnings. Limited partners generally owe it only on guaranteed payments for services. S-Corporation shareholders do not pay self-employment tax on their share of corporate profits, though they must take a reasonable salary subject to payroll taxes. That salary requirement is why many owners elect S-Corp status once profits climb high enough to make the payroll-tax savings worth the paperwork. Self-employment tax is calculated on Schedule SE and filed with Form 1040.
The Qualified Business Income Deduction
Section 199A lets eligible pass-through owners deduct up to 20% of their qualified business income from federal taxable income. The deduction was made permanent by federal legislation signed in July 2025, after being originally set to expire at the end of that year.
For 2026, the phase-out for certain service businesses (law, accounting, consulting, healthcare, and similar fields) begins at $201,750 of taxable income for most filers and $403,500 for married couples filing jointly. Below those thresholds, the deduction is simply 20% of qualified business income. Above them, the calculation turns on wages paid by the business or the basis of depreciable property it holds.
Because Florida has no state income tax to layer on top, the QBI deduction reduces your only income tax bill on pass-through earnings. A Florida LLC owner with $200,000 of qualified business income could knock $40,000 off taxable income, saving roughly $8,800 to $9,600 in federal tax depending on bracket.
Quarterly Estimated Payments
Pass-through income is not withheld automatically the way a paycheck is, so the IRS expects quarterly estimated payments. The 2026 due dates are April 15, June 15, September 15, and January 15, 2027. The January payment can be skipped if you file your 2026 return and pay the full balance by February 1, 2027.9Internal Revenue Service. 2026 Form 1040-ES
Missing a deadline triggers an underpayment penalty. The penalty is waived if your total tax due after withholding and credits is under $1,000, or if you paid at least 90% of your current-year tax liability or 100% of last year’s tax, whichever is less. If your prior-year adjusted gross income exceeded $150,000 (or $75,000 for married filing separately), that 100% safe harbor rises to 110%.10Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty This is where owners coming from W-2 jobs tend to stumble in their first year, because withholding used to handle everything on their behalf.
How Pass-Through Income Gets Reported
Reporting starts at the entity. Partnerships and multi-member LLCs file Form 1065, an information return that reports total income, deductions, and credits. The partnership itself owes no tax, but the filing is mandatory.11Internal Revenue Service. About Form 1065, U.S. Return of Partnership Income S-Corporations file Form 1120-S for the same purpose.12Internal Revenue Service. About Form 1120-S, U.S. Income Tax Return for an S Corporation Sole proprietors skip the entity-level return and report business income directly on Schedule C of their personal Form 1040.
Every partnership and S-Corporation then prepares a Schedule K-1 for each owner, breaking down that owner’s share of income, losses, deductions, and credits based on their ownership percentage. Figures from the K-1 flow to the matching lines on your personal return.13Internal Revenue Service. 2025 Partners Instructions for Schedule K-1 (Form 1065) Income retains its character when it passes through: capital gains earned by the business stay capital gains on your personal return.
The federal due date for partnership and S-Corporation returns is March 15, or the next business day. Personal returns incorporating K-1 income are due April 15. Extensions are available for both, but an extension to file is not an extension to pay. Tax owed must still be estimated and paid by the original due date, or interest and penalties accrue.
Florida Filings That Apply Even Without a State Income Tax
The state does not tax your pass-through income, but it still expects paperwork and other taxes.
Annual Report
Every Florida LLC, corporation, and limited partnership must file an annual report with the Division of Corporations through Sunbiz between January 1 and May 1 each year. The report confirms current officers, directors or managers, registered agent, and principal address. Filing fees are $138.75 for an LLC, $150.00 for a profit corporation, $500.00 for a limited partnership or LLLP, and $61.25 for a nonprofit corporation.
Miss the May 1 deadline and a $400 late fee is added on top of the standard filing fee. Nonprofits are exempt from the late fee.14Florida Department of State. File Annual Report – Division of Corporations Fail to file long enough and the state will administratively dissolve or revoke the entity, which can put both your liability protection and your tax classification at risk.
Tangible Personal Property Tax
If your business owns equipment, furniture, fixtures, or other physical assets other than real estate, you likely owe tangible personal property tax to your county. File Form DR-405 with your county property appraiser by April 1 each year. Filing on time qualifies you for an exemption of up to $25,000 in assessed value; miss the deadline and you lose the exemption entirely.15Florida Dept. of Revenue. Taxpayers – Tangible Personal Property The rate varies by county.
Reemployment Tax
If your pass-through entity has employees, you pay Florida’s reemployment tax, the state’s version of unemployment insurance. The 2026 taxable wage base is $7,000 per employee. New employers start at 2.7%, which stays in effect for the first 10 quarters. After that, the state calculates an experience-based rate ranging from 0.1% to 5.4% depending on claims history.16Florida Dept. of Revenue. Reemployment Tax Rate Information
Sales and Use Tax
A pass-through entity that sells taxable goods or services needs a Sales and Use Tax Certificate of Registration from the Florida Department of Revenue, obtained through the Florida Business Tax Application.17Florida Dept. of Revenue. Account Management and Registration The state rate is 6%, and most counties add a local discretionary surtax. You collect from customers and remit monthly, quarterly, or semiannually depending on volume.