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

Florida does not tax wages, salaries, or investment income at the state level. This is one of the few states with no income tax. However, you will still owe sales tax when you buy most goods and services, and property tax if you own real estate. The sales tax rate varies by county because counties add their own tax on top of the state rate.

The state sales tax is 6 percent. Your county may add between 0.5 and 2 percent, so the total you pay at checkout ranges from 6 to 8.5 percent depending on where you shop. Property tax rates also vary by county and are based on the assessed value of your home or land.

Key Takeaways

  • Florida has no state income tax on wages, retirement income, or investment gains, which is why many people move there for tax reasons.
  • Sales tax starts at 6 percent statewide and rises to 6.5 to 8.5 percent when you add the county surtax, which differs by location.
  • Property tax is calculated as a percentage of your home's assessed value and varies by county, typically ranging from 0.7 to 1.1 percent annually.
  • Groceries, prescription medications, and some medical equipment are exempt from sales tax in Florida.
  • Homeowners may reduce their property tax bill through the homestead exemption if they claim their home as their primary residence.

How Florida's sales tax works

When you buy something in a store or online and it ships to Florida, you pay the state's 6 percent sales tax plus your county's additional tax. The county surtax ranges from 0.5 percent in some counties to 2 percent in others. This means your total sales tax bill could be 6.5 percent in a low-tax county or 8 percent in a high-tax county. A few counties sit at 8.5 percent.

The sales tax applies to most tangible goods—clothing, electronics, furniture, and cars. It also applies to many services, including haircuts, repairs, and restaurant meals. However, some items are always exempt: groceries you buy at a supermarket, prescription medications, and certain medical devices like hearing aids and wheelchairs. Prepared food at a restaurant is taxed, but raw groceries are not.

If you order something online from out of state, Florida's sales tax still applies if the seller has a physical presence in Florida or meets certain economic thresholds. Most major retailers now collect Florida sales tax on online orders.

Property tax in Florida

If you own a home or land in Florida, you owe property tax each year. The tax is calculated as a percentage of your property's assessed value, set by your county's property appraiser. The rate varies by county but typically falls between 0.7 and 1.1 percent of the assessed value annually. A home assessed at $300,000 in a county with a 0.9 percent rate would owe roughly $2,700 per year.

Your property tax bill also includes school district taxes and taxes for local services like fire and police. These vary by location. The total property tax you owe is the sum of all these components, so two homes of equal value in different counties can have very different tax bills.

Property taxes are due by March 31 each year. If you do not pay by that date, you will owe a penalty and interest. Most people pay through their mortgage lender, which collects the tax as part of the monthly payment and holds it in escrow.

The homestead exemption and property tax relief

If your home is your primary residence, you may reduce your property tax bill through the homestead exemption. This exemption removes the first $50,000 of your home's assessed value from taxation. On a home assessed at $300,000, the exemption would reduce the taxable value to $250,000, lowering your annual bill by roughly $450 (depending on your county's rate).

To claim the homestead exemption, you must file a form with your county property appraiser by March 1 of the year you want the exemption to take effect. You will need to prove that the property is your primary residence, usually with a driver's license or voter registration showing your address. Once approved, the exemption continues each year unless you move or sell the property.

Florida also offers additional property tax breaks for seniors (age 65 and older), disabled people, and surviving spouses of military members. These programs stack on top of the homestead exemption and can reduce your bill further. Your county property appraiser's office can tell you which programs you may be may be able to access for.

Corporate and business taxes in Florida

Florida has a corporate income tax of 5.5 percent on business profits. However, sole proprietors and partners do not pay this tax—their business income is taxed at the federal level only. If you operate as an LLC or S-corporation, you may owe the corporate tax depending on how you structure your business.

Florida also collects a sales tax on services and goods sold by businesses, the same 6 percent plus county surtax that consumers pay. Businesses must register with the Florida Department of Revenue and collect and remit sales tax monthly or quarterly, depending on their volume.

Taxes on retirement income and investments

Because Florida has no state income tax, you do not owe state tax on Social Security, pensions, 401(k) withdrawals, or IRA distributions. You also do not owe state tax on capital gains, dividends, or interest income. This is a major reason retirees move to Florida.

You will still owe federal income tax on these sources of income. The state exemption applies only to Florida's tax, not to the IRS. If you receive a pension from another state, that state may try to tax it even after you move to Florida, depending on the pension's source and your state of residence at the time you earned it.

Other Florida taxes you may encounter

Florida collects a documentary stamp tax when you buy real estate. This tax is 0.6 percent of the purchase price and is usually paid by the seller, though the buyer and seller can negotiate who pays it. On a $400,000 home purchase, the stamp tax would be $2,400.

If you own a vehicle in Florida, you pay registration fees and a sales tax on the purchase. The sales tax on a car is the same as on other goods—6 percent plus your county surtax. You do not pay an annual vehicle property tax like some states do.

Certain services and activities carry special taxes. For example, hotel stays are subject to a tourist development tax (usually 5 to 6 percent on top of sales tax), and rental cars carry a surcharge. Alcohol purchases include state and federal excise taxes in addition to sales tax.

Frequently Asked Questions

Do I have to pay Florida income tax if I move there from another state?

No. Once you establish Florida residency, you owe no state income tax on wages or investment income. You will need to change your driver's license and voter registration to Florida to prove residency. The IRS and your former state may still tax income earned while you lived there.

What is the difference between assessed value and market value for property tax?

Assessed value is what your county appraiser determines your home is worth for tax purposes. Market value is what your home would sell for on the open market. Assessed value is usually lower than market value, but it can lag behind if the market rises quickly. Your property appraiser reassesses homes every year.

Can I deduct Florida sales tax on my federal income tax return?

You can deduct either state income tax or state sales tax on your federal return, but not both. Since Florida has no income tax, you would deduct sales tax if you itemize deductions. However, most people take the standard deduction instead, which is usually larger.

Are there any items that are taxed differently in Florida?

Yes. Groceries and prescription drugs are exempt from sales tax. Prepared food at restaurants is taxed, but raw food is not. Certain medical equipment and mobility aids are also exempt. Clothing and shoes are taxed at the full rate.

What happens if I do not pay my property tax on time?

If you miss the March 31 important date, you will owe a penalty starting at 3 percent of the unpaid tax, plus interest that compounds monthly. After two years of nonpayment, the county can sell your property at a tax deed sale to recover the debt.