Florida has no state income tax on wages or salaries

Florida does not charge a state income tax on money you earn from working. This means your paycheck is not reduced by a state income tax withholding, and you do not file a state income tax return for wages. This applies whether you work full-time, part-time, or are self-employed.

However, Florida does tax certain other types of income. Understanding which income is taxed and which is not helps you plan your finances and know what to report if you move to Florida or earn money from sources beyond a regular job.

Key Takeaways

  • Florida charges zero percent state income tax on wages, salaries, and self-employment income from a business or trade.
  • Florida does tax income from retirement accounts, including distributions from IRAs and 401(k)s, at rates between 4.5 percent and 5.75 percent depending on the type of account.
  • Certain retirement income is exempt from Florida tax, including Social Security benefits and distributions from may have access to pension plans for public employees.
  • Florida taxes capital gains, interest, and dividends at the same rates as other income, but long-term capital gains may receive preferential treatment under federal law.
  • If you earned income in another state before moving to Florida, you may still owe that state's income tax for the months you lived there.

Income types Florida does tax

Even though Florida has no wage tax, the state does tax certain forms of income. Distributions from traditional IRAs and 401(k) plans are taxed at rates between 4.5 percent and 5.75 percent, depending on the type of account and when the money was contributed. Roth IRA distributions are not taxed because the money was already taxed when you put it in.

Florida also taxes interest income, dividend income, and capital gains from investments. If you sell a stock or mutual fund at a profit, that gain is subject to Florida tax. Interest from bonds or savings accounts counts as income. Dividends from stocks and funds are taxed as income as well. These are taxed at the same rates as other income types.

Rental income from property you own in Florida is taxed. If you rent out a house, apartment, or room, the net income (after deducting expenses like repairs, property tax, and insurance) is subject to Florida tax.

Income types Florida does not tax

Social Security benefits are not taxed by Florida, even if you receive a large amount. This is one reason many retirees move to Florida. Military pensions and distributions from certain public employee pension plans are also exempt from Florida tax.

Income earned in another state before you moved to Florida is not taxed by Florida, but you may still owe tax to the state where you earned it. For example, if you worked in New York for six months and then moved to Florida, New York may tax the income you earned while you lived there.

Florida sales tax and property tax instead

Because Florida has no income tax, the state relies on other taxes to fund schools, roads, and services. Sales tax in Florida ranges from 6 percent to 7.5 percent depending on the county. This tax is added to most purchases at the register.

Property tax is charged by each county on the value of real estate you own. The rate varies by county but typically ranges from 0.7 percent to 1.1 percent of the property's assessed value per year. Homeowners may receive a homestead exemption that reduces the taxable value of their primary residence.

How Florida tax rates compare to other states

Florida's lack of state income tax makes it one of nine states with no wage tax. Other states with no income tax include Texas, Nevada, South Dakota, Wyoming, Washington, Tennessee, New Hampshire, and Alaska. However, these states make up the difference through sales tax, property tax, or other fees.

States with income tax typically charge between 2 percent and 13 percent on wages, depending on income level and the state. Many of these states also have lower sales tax rates than Florida. Whether moving to Florida saves you money overall depends on your income level, how much you spend, and whether you own property.

What to do if you move to Florida from another state

When you move to Florida, you become a Florida resident for tax purposes once you establish residency. This typically means you have a permanent home in Florida and spend more than half the year there. Once you are a resident, you no longer owe income tax to your previous state on income earned after you move.

However, you must still report income earned in your previous state during the months you lived there. If your previous state withheld taxes from your paychecks, you may receive a refund when you file that state's final return. Keep records of when you moved and your last payday in the previous state to make this calculation accurate.

Retirement income and tax planning in Florida

Many people move to Florida specifically to avoid state income tax on retirement income. However, the tax treatment of retirement accounts is more complex than the straightforward "no income tax" rule suggests. Traditional IRA and 401(k) distributions are taxed, while Roth distributions are not. Social Security and certain pensions are exempt.

If you are planning to retire in Florida, consider which accounts you will draw from and in what order. A financial advisor or tax professional can help you structure withdrawals to minimize your total tax burden across federal, state, and local taxes. The federal tax on retirement income is the same everywhere, but Florida's lack of state tax can still provide meaningful savings over time.

Frequently Asked Questions

Do I have to file a Florida state tax return?

No. Because Florida has no income tax, there is no state tax return to file. You only file a federal return with the IRS. If you earned income in another state before moving to Florida, you may need to file a final return with that state.

Is Social Security taxed in Florida?

No. Florida does not tax Social Security benefits. However, the federal government may tax a portion of your benefits depending on your total income, so you may still owe federal tax even though Florida charges nothing.

What about military pensions or government employee pensions?

Military pensions and pensions from certain public employee plans are exempt from Florida tax. However, distributions from a private employer's 401(k) or IRA are taxed. Check with your pension provider or a tax professional to confirm which type of pension you receive.

If I work remotely for a company in another state, do I owe that state's income tax?

Generally, no. Once you are a Florida resident, you owe income tax to Florida (which is zero) rather than to the state where your employer is located. However, some states have different rules, so confirm with a tax professional if your employer is in a state known for aggressive tax collection.

Does Florida tax investment income like stocks and bonds?

Yes. Interest, dividends, and capital gains are all taxed by Florida at the same rates as other income types. However, the federal government may offer preferential rates for long-term capital gains, which can reduce your overall federal tax bill.