Florida has no state income tax, but you still pay sales tax and property tax

Florida does not charge state income tax on wages, retirement income, or investment gains. That is the core fact. But "tax-free" is incomplete — Florida residents and visitors pay sales tax on most purchases and property tax on real estate. The state makes up the revenue it does not collect from income through these other taxes, which are often higher than in states that do tax income.

If you are moving to Florida or planning to retire there, the income tax exemption matters most if you have substantial wages, pensions, or investment income. For everyday purchases and property ownership, the sales and property taxes are what actually affect your budget.

Key Takeaways

  • Florida collects no state income tax on wages, pensions, Social Security, or investment income, which is a significant advantage for high earners and retirees.
  • Sales tax in Florida ranges from 6% to 7.5% depending on the county, and applies to most goods and some services.
  • Property tax rates vary by county but average around 0.83% of assessed home value annually, which is moderate compared to other states.
  • Groceries, prescription medications, and medical equipment are exempt from sales tax in Florida, reducing the tax burden on essential purchases.

What Florida sales tax covers and what it does not

Florida's sales tax starts at 6% and goes up to 7.5% depending on which county you are in. Most physical goods are taxed — clothing, electronics, furniture, and restaurant meals all have sales tax added at checkout. Some services are taxed too, including repair work, haircuts, and pest control.

Several categories are exempt. Groceries (unprepared food you cook at home) are not taxed. Prescription medications and over-the-counter drugs are exempt. Medical equipment like wheelchairs, walkers, and diabetic supplies are also exempt. Durable medical equipment prescribed by a doctor avoids the tax. If you buy clothing or shoes, you pay sales tax — Florida does not exempt apparel the way some states do.

The county you live in or shop in determines your exact rate. Miami-Dade County is 7%, Hillsborough County (Tampa area) is 7.5%, Orange County (Orlando area) is 6.5%. If you shop online from a Florida address, the sales tax rate of your county applies to the order.

How property tax works in Florida

Property tax is assessed by county and is based on the appraised value of your home. The statewide average is around 0.83% of the home's assessed value per year, though rates vary. Broward County runs about 0.76%, while some rural counties go higher. A $300,000 home in an average county would generate roughly $2,490 in annual property tax.

Florida offers a homestead exemption if you own and occupy the home as your primary residence. The exemption removes the first $50,000 of assessed value from taxation, and an additional $25,000 for homes valued over $75,000. You must explore through your county property appraiser's office, usually within a set window after purchase. The exemption saves most homeowners $500 to $1,500 per year depending on home value and county rate.

Renters do not pay property tax directly, but landlords pass the cost along through rent. Property tax increases are capped at 3% per year unless the property changes hands, at which point it is reassessed at current market value.

Income sources that remain untaxed in Florida

Wages from employment are not taxed by the state. A person earning $80,000 per year pays no Florida state income tax on that amount. Retirement income — pensions, 401(k) withdrawals, and IRA distributions — is also untaxed. Social Security benefits are not taxed by Florida. Investment income from stocks, bonds, and mutual funds held in taxable accounts is not taxed by the state (though the federal government may tax it).

This is why Florida attracts retirees. Someone with a $50,000 annual pension and $30,000 in investment income pays zero state tax on that $80,000. In a state with income tax, that same person might owe $3,000 to $5,000 depending on the state's rate and brackets.

The federal government still taxes all of these income sources at the federal level. Florida's exemption is state-only. You still file federal taxes and pay what you owe to the IRS.

Comparing Florida's tax burden to other states

States without income tax — Florida, Texas, Nevada, South Dakota, Tennessee, Washington, and Wyoming — typically compensate with higher sales or property taxes. Florida's combined state and local sales tax (6% to 7.5%) is moderate. Its property tax rate is below the national average. Together, they create a lower overall tax burden for high-income earners and retirees, but a higher burden for people with low incomes who spend most of what they earn on taxed purchases.

A person earning $150,000 per year saves roughly $6,000 to $9,000 annually by living in Florida instead of a state with 5% to 6% income tax. A person earning $30,000 per year and spending most of it on groceries and rent may pay a similar or slightly higher percentage of income in taxes because sales tax applies to more of their spending.

States with income tax but lower sales tax — like New York (4% sales tax but 6.85% income tax) — may end up costing more for high earners and less for low earners. The math depends on your specific income level and spending patterns.

Special tax situations in Florida

Businesses in Florida pay corporate income tax to the federal government but not to the state. This is one reason Florida has attracted corporate headquarters and small business owners. However, businesses do pay sales tax on inventory and supplies they purchase, and they pay property tax on commercial real estate.

Intangible personal property — stocks, bonds, mutual funds held in brokerage accounts — is not taxed by Florida. Some states charge a small annual tax on these holdings; Florida does not. This applies only to property held in taxable accounts; retirement accounts like 401(k)s and IRAs are already sheltered from state tax.

Vehicles registered in Florida are subject to property tax based on their assessed value, though the rate is typically lower than for real estate. The tax is collected when you renew your registration.

What happens if you move to Florida from another state

If you relocate to Florida, you become subject to Florida's tax rules once you establish residency. Residency is typically established by obtaining a Florida driver's license, registering to vote, and registering your vehicle in the state. You do not have to own property to be a resident.

Your first year may involve filing taxes in both your old state and Florida, depending on when you moved and your income sources. Some states tax income earned before you leave, even if you move partway through the year. Check with your previous state's tax authority about the rules for your departure date.

Retirement income sources like pensions and Social Security are not taxed by Florida from day one of residency. Wages earned after you move are also untaxed by the state. If you have investment income or rental property income, that is untaxed by Florida as well.

Frequently Asked Questions

Do I have to pay federal income tax if I live in Florida?

Yes. Florida's lack of state income tax does not affect federal taxes. You still file a federal return and pay federal income tax on all income sources. The federal government taxes wages, investment income, retirement distributions, and other income regardless of which state you live in.

Is Social Security taxed in Florida?

Florida does not tax Social Security benefits. The federal government may tax them depending on your total income, but the state does not. This is one reason Florida is popular with retirees on fixed incomes.

Do I pay sales tax on groceries?

No. Unprepared food — items you buy at the grocery store to cook at home — is exempt from Florida sales tax. Prepared foods like restaurant meals, deli items, and hot foods from a grocery store do have sales tax applied.

What is the property tax rate in Florida?

Property tax rates vary by county and range from about 0.6% to 1.1% of assessed home value. The statewide average is around 0.83%. Your county property appraiser's office can tell you the exact rate for your address. The homestead exemption reduces the taxable value for primary residences.

If I rent in Florida, do I pay sales tax on rent?

No. Rent payments are not subject to sales tax. However, property tax paid by the landlord is typically factored into the rent amount. Sales tax applies to goods and some services, but not to housing costs.