Taxes in Florida

Taxes in Florida – JD Supra 3/21/18.

The Sunshine State is one of the lowest tax burden states in the US.  Florida has no state individual income tax.  At the state level, there is NO tax on social security benefits, retirement income, IRAs, 401(k) accounts, pensions, inheritance and estate taxes.  The state also has business friendly tax policies, a competitive cost of doing business and a streamlined regulatory environment. 

Homeowners receive property tax relief via a homestead valuation exemption towards their principal permanent residence.   Florida’s homestead exemption can reduce the home’s value for assessment of property taxes by as much as $50,000.

Taxes in Florida

Major taxes collected in Florida include sales and use tax, intangible tax and Corporation income taxes.  The State of Florida:

• Does not have an individual state income tax.
• Has a sales tax rate of 6%.
• Has a corporate tax rate of 5.5% for C-Corporations.
• Corporations that do business and earn income in Florida must file a corporate income tax return (unless they are exempt).
• Florida Property Tax is based on market value as of January 1st that year.
• Does not have corporate income tax on limited partnerships.
• Does not have corporate income tax on subchapter S-corporations.
• Does not have corporate franchise tax on capital stock.
• Does not have state-level property tax assessed.
• Does not have property tax on business inventories.
• Does not have property tax on goods-in-transit for up to 180 days.
• Does not have sales and use tax on goods manufactured or produced in Florida for export outside the state.
• Does not have sales/use tax on co-generation of electricity.

Since the federal deduction for State and Local Taxes (SALT) was capped at 10,000 and interest expense on only the first $750,000 of mortgage debt is deductible under the 2017 Tax Cuts and Jobs Act (TCJA), many Taxpayers think that Florida could fare better than states like California and New York.  Real estate in Miami is predicted to fare better than the rest of Florida due to its high percentage of foreign buyers. 

Perhaps the changes in the TCJA could spark an exodus of High Net Worth/High Earners living in high tax jurisdiction states into the state of Florida.  Living in Florida could certainly lower their overall tax bill, but Moving from one state to another has never been easy for anyone.    Only time will determine if the Tax Reform motivated Taxpayers.

Don’t be a victim of your own making.  If you are a Taxpayer considering moving, consult your tax specialist.  Particularly, since the Tax Reform removed the deductibility of moving expenses.   Taxpayers are encouraged to consult their tax specialists as every tax situation is different.

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