Federal Tax in Florida: What Residents and Businesses Need to Know

Florida levies no personal income tax, which is the headline and the reason a great many people move here.

It is accurate and it is narrower than it sounds. Federal obligations are unchanged, several state and local taxes still apply, and income connected with another state does not automatically become untaxed because you now live here.

This covers what genuinely changes and what does not, the state taxes that do apply, what it means for retirees, the estate position, and the questions that arise when you live here and work for an employer somewhere else.

Florida: No State Income Tax

Florida is one of nine U.S. states with no state income tax on individuals. Florida residents do not file a state income tax return and do not pay state tax on wages, salaries, self-employment income, interest, dividends, or capital gains.

This makes Florida a popular destination for high earners, retirees, and remote workers relocating from high-tax states like New York or California.

Federal Income Tax Still Applies to Floridians

Living in Florida does not reduce your federal tax obligations. All Florida residents pay the same federal income tax rates as any other American:

Florida State Taxes That DO Apply

Sales Tax

Florida's state sales tax is 6%. Most counties add a local surtax (typically 0.5-2%), bringing the effective rate to 6-8% depending on location.

Property Tax

Florida has no state property tax, but counties and municipalities levy property taxes. Rates vary by county. Florida's Homestead Exemption reduces assessed value by $25,000 (and an additional $25,000 for assessed values between $50k-$75k).

Corporate Income Tax

Florida imposes a corporate income tax of 5.5% on C-corporation net income apportioned to Florida.

Documentary Stamp Tax

Tax on real estate transfers: $0.70 per $100 of consideration (Miami-Dade County $0.60 + surtax). Applies to deeds and mortgages.

Reemployment Tax (Unemployment Tax)

Employers pay Florida reemployment tax (state unemployment insurance). New employer rate is 2.7%; experienced-employer rate varies.

Retirees in Florida: Federal Tax on Retirement Income

Florida is attractive for retirees because there is no state income tax on pension, IRA, or 401(k) withdrawals. However, federal tax still applies:

• Traditional IRA/401(k) withdrawals: taxed as ordinary income federally
• Social Security: 0-85% may be federally taxable based on combined income
• Roth IRA qualified distributions: tax-free at federal level too
• Pension income: taxed federally if funded by employer (pre-tax)

Estate and Gift Taxes in Florida

Florida has no state estate tax and no state inheritance tax. The federal estate tax applies to estates over $13.61 million (2025 exemption).

Living Here and Working for an Employer Elsewhere

The absence of a state income tax applies to you as a resident. It does not automatically apply to income connected with another state, and remote working has made that distinction matter to far more people than it used to.

Two questions decide the outcome. The first is where the work is physically performed, which is usually the governing fact: states generally tax income earned from work done within their borders, whoever the worker is. The second is whether the state your employer sits in applies a rule that treats work done elsewhere for its own convenience as if it were performed there. A small number of states take that position, and where they do, the result can be a filing obligation you did not expect.

The practical consequence is that the employer's withholding is worth checking rather than assuming. Payroll set up when you lived in one state does not update itself when you move, and an employer with no other connection to your new state may not be registered to withhold there at all. Sorting this out at the point of the move is straightforward; sorting it out at the return is not.

• Tell your employer in writing when you move, and check the next pay stub rather than the one after it
• Confirm the position with the revenue department of the state your employer is in, since that is where the unexpected obligation would arise
• Keep a record of days worked in each state if you travel for work at all
• Check the position again if you change employer, because the answer follows the employer as much as it follows you

Frequently Asked Questions

Written by

Anu Gupta, CA, EA, B.Tech

Anu works with US businesses on tax and entity questions at Profitjets, from choosing a structure to the filings that follow it. She writes about the decisions owners make once and then live with for years. Connect on LinkedIn