Tax Benefits of Living In Florida

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Harold Simon CPA MBA

I'm the founder and CEO and after 20+ years working with companies worldwide, I now help small businesses achieve their business goals. I am different from most CPAs since I provide a holistic accounting, tax, and technology approach.

No Individual State Income Taxes

One of the most attractive features of Florida is that it has no state income tax. This means that you can keep more of your earnings from your salary, business income, retirement income, or investment income. You also don’t have to file a state tax return or pay state taxes on Social Security benefits, pensions, annuities, or IRA distributions. This can save you a lot of time and money compared to other states that impose income taxes.

No Estate Taxes

Another benefit of living in Florida is that it has no estate or inheritance tax. Florida is one of 38 states that have no estate taxes. This means that you can pass on your assets to your heirs without worrying about paying any state taxes on them. Florida also does not impose a gift tax on transfers of property during your lifetime. However, you may still be subject to federal state and gift taxes, depending on the value of your estate and the amount of your gifts.

Homestead Exemption

If you own a home in Florida and use it as your primary residence, you may qualify for the homestead exemption. This is a tax break that reduces the taxable value of your home by up to $50,000 for property tax purposes. This can lower your property tax bill significantly and protect your home from creditors in case of bankruptcy or foreclosure. To claim the Homestead exemption, you need to file an application with your county property appraiser by March 1st of each year.

Save Our Homes Act and Amendment 5

In addition to the homestead exemption, Florida also has the Save Our Homes Act and Amendment 5. These are laws that limit the annual increase in the assessed value of your homestead property to 3% or the rate of inflation, whichever is lower. This means that your property taxes will not go up too much even if your home’s market value increases. Amendment 5 (Portability) also allows you to transfer up to $500,000 of your accumulated Save Our Homes benefit to a new homestead property within two years of selling your old one.

Final Thoughts

Living in Florida provides many tax benefits that can make it an appealing place to live and work. However, before you decide to move to Florida, you should consult with a tax professional who can advise you on your specific situation and help you plan accordingly. You should also consider other factors such as the cost of living, the quality of life, and the legal implications of changing your residency.