Florida does not tax individual income, which means residents do not pay state taxes on wages, salaries, or investment income. This can be particularly advantageous for high earners or retirees.
The lack of a state income tax is often cited as a reason many people move to Florida, especially from states with higher income tax rates. It can be an appealing factor for both individuals and businesses.
Instead of income tax, Florida generates revenue through other means, such as sales taxes, property taxes, and various fees. The statewide sales tax rate is 6%, but local jurisdictions can impose additional sales taxes.
The absence of a state income tax can be a draw for businesses, potentially leading to a more favorable environment for startups and entrepreneurs.
Many retirees find Florida appealing due to the lack of state income tax on pensions, Social Security benefits, and other retirement income.
To qualify for Florida's lack of a state income tax as a resident, you should establish legal residency in the state. Here are the key residency requirements:
While there’s no specific number of days you must stay in Florida, spending at least 183 days in the state each year is often recommended to demonstrate that it is your primary residence.
You must show intent to make Florida your primary home. This can include:
Maintain records that support your residency, such as:
To fully qualify as a Florida resident and take advantage of the lack of state income tax, it’s important to sever ties with your previous state of residence. This includes changing your address for all legal and financial documents.
To qualify, you must own the home and use it as your primary residence as of January 1 of the tax year.
The exemption can reduce the assessed value of your property by up to $50,000. The first $25,000 applies to all property taxes, while the additional $25,000 applies only to non-school taxes.
Homeowners must file an application with their county property appraiser's office, usually by March 1.
To fully qualify as a Florida resident and take advantage of the lack of state income tax, it’s important to sever ties with your previous state of residence. This includes changing your address for all legal and financial documents.
Under the SOH program, the assessed value of your homestead property can only increase by a maximum of 3% per year or the change in the Consumer Price Index (CPI), whichever is lower. This helps protect homeowners from rapidly rising property values.
If you move to a new home, you can transfer some or all of your SOH benefit to the new property, provided it is also your homestead.
There is a provision that allows for a 10% cap on property tax increases for certain non-homesteaded properties, specifically under the “Non-Homestead Assessment Limitation”.
This cap applies to non-homesteaded residential properties (like rental homes or second homes), commercial properties, and vacant land.
Under this cap, the assessed value of non-homesteaded properties can only increase by a maximum of 10% per year. This provides some protection against large spikes in property tax bills that can occur due to rapidly increasing market values.
This cap was established through constitutional amendments and is intended to stabilize property taxes for non-homesteaded properties, making it easier for property owners to plan their finances.
Property owners should be aware that if a non-homesteaded property is improved or substantially altered, it may be assessed at full market value rather than the capped value.
The 3% cap on Homesteaded Properties and the 10% cap on non-homesteaded Properties help mitigate the impact of property tax increases, particularly in areas experiencing significant growth, like Naples. It offers some predictability for property owners in managing their tax liabilities.
To qualify as a Florida resident for the purpose of obtaining a Homestead Exemption, you must meet several criteria:
You must own the property for which you are applying for the Homestead Exemption. This can include being the sole owner or a co-owner.
The property must be your primary residence, meaning you live there as your main home. You should occupy the property as of January 1 of the tax year for which you are applying.
You need to establish legal residency in Florida. This can be demonstrated through:
You must apply for the Homestead Exemption through your county's property appraiser's office. The application is typically due by March 1 of the tax year.
When applying, you may need to sign an affidavit confirming that the property is your permanent residence and that you meet all eligibility criteria.
If you own multiple properties, only your primary residence can qualify for the Homestead Exemption.
If you’ve previously claimed the exemption on another property in Florida, you may be able to transfer (or "port") your benefits to your new homestead property.
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