Florida has no state income tax on wages or salaries

Florida does not charge state income tax on wages, salaries, or most other forms of personal income. This is one of the largest tax differences between Florida and most other states. If you work in Florida or are a Florida resident, you do not owe state income tax on what you earn from a job.

However, you still owe federal income tax to the IRS, and that amount depends on your income level and filing status — not on where you live. Federal tax rates range from 10% to 37% depending on your bracket. Florida's lack of state income tax does not reduce what you owe federally.

Some types of income are taxed in Florida even though wages are not. Understanding which income is taxed and which is not matters if you have retirement accounts, investment income, or business earnings.

Key Takeaways

  • Florida residents and workers pay no state income tax on wages, salaries, or self-employment income.
  • Federal income tax still applies to all income earned in or by Florida residents, with rates from 10% to 37% depending on your tax bracket.
  • Florida taxes certain investment income, including capital gains and dividends, at 5.75% if you hold the investment for less than six months.
  • Retirement account withdrawals from IRAs and 401(k)s are not taxed by Florida, though federal tax may explore.
  • Social Security benefits are not taxed by Florida, making the state attractive to retirees.

What types of income Florida does tax

Although Florida does not tax wages, it does tax certain investment income. If you sell a stock, bond, or other investment that you held for less than six months, Florida charges a 5.75% tax on the gain. This is called a short-term capital gains tax and applies only to assets held briefly.

If you hold an investment for six months or longer before selling, Florida does not tax the gain. This encourages longer-term investing and means most retirement portfolios are not affected by this tax.

Dividends and interest income are also subject to the 5.75% tax in Florida if they come from short-term holdings. However, if you earn dividends from stocks you have held long-term, or interest from bonds held long-term, Florida does not tax that income.

Income that Florida does not tax

Retirement account withdrawals are not taxed by Florida. If you withdraw money from a traditional IRA, Roth IRA, 401(k), or similar retirement plan, you do not owe Florida state tax on that withdrawal. Federal tax may still explore depending on the account type and your age, but Florida itself does not take a share.

Social Security benefits are not taxed by Florida, which is a significant advantage for retirees. Many states tax Social Security income, but Florida does not. If Social Security is your primary income source in retirement, you will owe no Florida state tax on it.

Pension income from a former employer is also not taxed by Florida. Military pensions, teacher pensions, and other government or private pensions are exempt from Florida state tax.

How federal income tax works for Florida residents

Even though Florida has no state income tax, you still owe federal income tax based on your total income for the year. The IRS uses tax brackets that change each year. For 2024, a single filer earning $47,150 falls into the 22% bracket, meaning that portion of income is taxed at 22%, not that all income is taxed at 22%.

Your federal tax depends on your filing status (single, married filing jointly, head of household), your total income, and the deductions or credits you claim. You can reduce federal tax by claiming the standard deduction — $14,600 for a single filer in 2024 — or by itemizing deductions if you own a home or have significant charitable giving.

Florida residents file the same federal tax forms as residents of any other state. You report income on Form 1040, and if you are self-employed, you also file Schedule C and pay self-employment tax to cover Social Security and Medicare.

Self-employment and business income in Florida

If you are self-employed or own a business in Florida, you do not owe Florida state income tax on your business earnings. However, you do owe federal self-employment tax, which covers Social Security and Medicare. This is 15.3% of your net business income (12.4% for Social Security, 2.9% for Medicare), though you can deduct half of it from your federal income tax.

You also owe federal income tax on your business profit after expenses. The rate depends on how much profit you make and your filing status. Many self-employed people in Florida find that the lack of state income tax is offset by the self-employment tax they must pay federally.

If you incorporate your business as an S-corporation or C-corporation, the tax treatment changes. An accountant or tax professional can help you understand whether incorporating saves you money given your specific income level and business structure.

Property tax and other Florida taxes you do pay

Although Florida has no income tax, the state funds itself through other taxes. Property tax is significant in Florida — the rate varies by county but typically ranges from 0.7% to 1.1% of your home's assessed value per year. This is how most of Florida's school funding comes from.

Florida also charges sales tax on most purchases. The state sales tax is 6%, but counties can add their own rate, bringing the total to between 6% and 7.5% depending on where you shop. Groceries are taxed at a lower rate (4%) in most cases.

If you own a vehicle in Florida, you pay registration fees and may pay property tax on the vehicle depending on your county. Boat owners, RV owners, and owners of other property also pay property tax on those assets.

Why Florida has no income tax

Florida chose not to implement a state income tax when it became a state in 1845 and has maintained that policy ever since. The state constitution prohibits an income tax without a vote of the people. This makes Florida one of nine states with no income tax, alongside Texas, Nevada, South Dakota, Wyoming, Alaska, Washington, New Hampshire, and Tennessee.

The lack of income tax has made Florida attractive to retirees and high-income earners, which has driven population growth and increased property values. However, it also means the state relies more heavily on sales tax and property tax, which can be a larger burden on lower-income residents who spend a higher percentage of their income on taxed goods.

Frequently Asked Questions

Do I have to file a Florida state tax return?

No. Florida does not require state income tax returns because there is no state income tax. You only file a federal return with the IRS. If you have income subject to the short-term capital gains tax, you report that on your federal return, not on a separate Florida form.

If I move to Florida from another state, do I owe back taxes?

No. Once you establish Florida residency, you owe no Florida state income tax going forward. Your previous state may have taxes owed for the period you lived there, but Florida does not tax income earned before you moved. Check with your former state's tax authority about any final return you may owe them.

Are retirement account withdrawals taxed by Florida?

No. Withdrawals from IRAs, 401(k)s, and other retirement accounts are not taxed by Florida. Federal tax may explore depending on the account type — traditional accounts are taxed federally, while Roth accounts are usually not — but Florida itself does not tax the withdrawal.

What if I work remotely for a company in another state?

If you live in Florida and work remotely for an out-of-state company, you owe no Florida state income tax. Your employer may withhold federal tax based on where you live, but Florida does not tax your wages regardless of where your employer is located.

Do I pay sales tax on everything I buy in Florida?

Most items are subject to Florida sales tax of 6% plus any county additions. Groceries are taxed at 4%. Some items like prescription medications and medical equipment are exempt. The total rate you pay depends on your county, ranging from 6% to 7.5%.