While Florida is commonly known for its year-round sunshine and beautiful sandy beaches, it’s also home to many tax and financial advantages as well. Generally considered a low-tax state, Florida residents likely enjoy reduced tax obligations compared to those of many other states. Florida does not impose a personal income tax, an inheritance tax, a gift tax, or an intangible personal property tax. Florida tax laws are governed under the Florida Constitution and would require a super-majority to evoke change. Some of the tax features of living in Florida include:
No state income tax
The assessment of an individual state income tax is prohibited by the Florida Constitution, so residents are free from state income tax liabilities. However, beware of the “snowbird tax” if you own property in another state as well. States such as New York, for example, consider you a resident for state income tax purposes if you still have a home in the state and you spend approximately 184 days or more in New York during the tax year. In addition, you may be subject to a personal income tax in New York for any taxable income derived from or connected with sources in that state, such as rental income from a New York-based property. Other states are becoming more aggressive and are mirroring New York’s tax revenue department.
No state estate taxes
While a Florida estate tax return must be submitted to the state of Florida for estates where a federal estate tax return is required, there is no separate Florida estate tax due. In contrast, many of the northeastern states have “decoupled” from the federal estate tax and still impose a state estate tax on much lower asset values. For example, even though the federal government charges an estate tax on assets valued over the exemption amount of $12.92 million per person (2023), the state of Massachusetts charges on assets valued over $1 million. Additionally, Florida does not assess an inheritance tax, which some states impose.
Homestead advantage of living in Florida
Every Florida resident who owns and resides on real property in Florida on January 1 and makes the property his or her permanent residence or the permanent residence of his or her dependent is eligible to receive a homestead exemption that would decrease the property’s taxable value by as much as $50,000. While the exemption is nontransferable, a homeowner may be able to transfer or “port” all or part of the assessment difference to a new Florida homestead. This exemption qualifies the home for the Save Our Homes assessment limitation, which states that after the first year a home receives a homestead exemption and the property appraiser assesses it at just value, the assessment for each following year cannot increase more than 3 percent or the percent change in the Consumer Price Index (CPI), whichever is less. Even if the value of your home decreases, the assessed value may increase, but only by this limited amount. The assessed value will never be more than the just value of your home. (www.floridarevenue.com)