Florida has no state income tax on wages, retirement income, or investment gains

Florida does not tax wages, salaries, retirement distributions, Social Security, or investment income. If you work in Florida or live here as a retiree, you will not file a state income tax return or pay state income tax on money you earn. This applies whether you are a resident or a non-resident who works in the state.

You will still owe federal income tax to the IRS on all income sources. Federal tax is separate from state tax and is required in every state. Florida's lack of a state income tax does not reduce what you owe to the federal government.

Some states without income tax make up the difference with higher sales tax, property tax, or corporate tax. Florida funds state government through sales tax (currently 6 percent statewide, with county additions ranging from 0.5 to 1.5 percent), property tax, and corporate income tax on businesses.

Key Takeaways

  • Florida residents and workers pay no state income tax on wages, retirement income, investment gains, or Social Security benefits.
  • You still owe federal income tax to the IRS, which is separate from state tax and required everywhere.
  • Florida funds state services through sales tax, property tax on real estate, and corporate income tax on businesses.
  • Non-residents who work in Florida also pay no state income tax, though they may owe income tax to their home state.
  • If you move to Florida from another state, you do not need to file a final state income tax return with Florida.

What taxes Florida residents do pay

Even though Florida has no income tax, residents and property owners pay other state and local taxes. Sales tax is the largest source of state revenue. The state sales tax rate is 6 percent, and most counties add between 0.5 and 1.5 percent on top of that, making the total between 6.5 and 7.5 percent depending on where you shop.

Property tax in Florida is based on the assessed value of real estate you own. The statewide average is around 0.83 percent of property value per year, though rates vary by county. Homeowners can claim a homestead exemption that reduces the taxable value of a primary residence, which lowers the annual bill.

Businesses in Florida pay corporate income tax at a rate of 5.5 percent on net income. Self-employed people and sole proprietors report business income on their federal return but do not pay Florida state income tax on it.

How to handle federal taxes while living in Florida

Living in Florida does not change your federal tax obligations. You must file a federal return with the IRS if your income exceeds the threshold for your filing status (the threshold varies by age and income type). You can file your federal return online through the IRS website, through tax software, or by mailing a paper form to the IRS.

The IRS has a free file program for people whose income is below a certain level. You can search for participating tax software on IRS.gov. If your income is above the free file threshold, you can purchase tax software or hire a tax professional to prepare your return.

Florida does not require you to file a state return, so you will not need to submit anything to the state. You only file with the federal government.

Moving to Florida from another state

When you move to Florida from a state that has income tax, you do not need to file a final return with that state for the year you move. Most states that tax income allow you to file a part-year resident return covering only the months you lived there. Contact your former state's tax department to find out whether you owe a part-year return and what documents you need.

Some states require you to prove you have moved out by showing a Florida driver's license, a lease or deed, or utility bills in your name. Keep these documents in case your former state questions your residency status.

Once you establish Florida residency, you will not owe state income tax to Florida on any future income. If you still own property in your former state, you may still owe property tax there, but not income tax.

Non-residents who work in Florida

If you live in another state but work in Florida, you do not pay Florida state income tax on your wages. However, you will owe income tax to your home state on that same income. Your employer in Florida will not withhold state income tax from your paycheck because Florida has no income tax to withhold.

When you file your federal return, you report all income from all sources, including work in Florida. Your home state will also want to know about income earned in Florida. Some states have reciprocal agreements that prevent you from being taxed twice on the same income, while others do not. Check with your home state's tax department to understand how they treat income earned in other states.

Self-employed people and business owners in Florida

If you are self-employed or own a business in Florida, you do not pay Florida state income tax on your business income. You will owe federal self-employment tax and federal income tax on your net business income, which you report on Schedule C of your federal return.

You may also owe Florida corporate income tax if your business is structured as a corporation or an S-corporation. Sole proprietorships and partnerships do not pay Florida corporate income tax. Consult a tax professional or the Florida Department of Revenue website to understand which business structure affects your tax obligations.

You must still register your business with the state and obtain any required licenses or permits, but these are separate from income tax and are based on the type of business you operate.

Retirement income and Social Security in Florida

Florida does not tax Social Security benefits, pension income, 401(k) distributions, or IRA withdrawals. Retirees who move to Florida from states that tax retirement income will see an when ready reduction in state taxes owed. This is one reason Florida attracts retirees.

You will still owe federal income tax on most retirement income. Social Security benefits may be partially taxable at the federal level depending on your total income, but Florida will not tax any of it. Pension and retirement account distributions are taxed by the federal government based on the type of account and your age.

Frequently Asked Questions

Do I have to file a Florida state income tax return?

No. Florida does not require state income tax returns because it has no state income tax. You only file with the federal government (the IRS). You do not file anything with Florida.

Will I owe federal taxes if I live in Florida?

Yes. Florida's lack of state income tax does not affect federal taxes. You owe the IRS federal income tax on all income sources if your income exceeds the filing threshold for your age and status. Federal tax is separate and required everywhere.

What if I moved to Florida mid-year from another state?

Contact your former state's tax department to find out whether you owe a part-year resident return for the months you lived there. Most states allow part-year returns. You will not owe Florida state income tax for any part of the year. Keep documentation of your move (lease, utility bills, driver's license) in case your former state questions when you left.

Does Florida tax retirement income or Social Security?

No. Florida does not tax Social Security, pensions, 401(k) distributions, or IRA withdrawals. The federal government may tax some retirement income, but Florida will not. This applies to all residents regardless of where they lived before moving to Florida.

Do I pay sales tax in Florida?

Yes. Florida charges 6 percent state sales tax, and most counties add 0.5 to 1.5 percent on top of that. The total sales tax you pay depends on the county where you make the purchase. This is separate from income tax and applies to most goods and some services.