An Overview of Florida Taxes

Florida doesn't have a personal income tax, nor does it have an estate tax or an inheritance tax. It does, however, impose a variety of sales and property taxes and some are pretty significant. 

The state's overall tax burden has nonetheless been ranked among the nation's lowest for decades according to the Tax Foundation, a non-profit and non-partisan educational and research organization.

Overview of Key Florida Taxes

The Florida Property Tax

The Florida constitution reserves all revenue from property taxes for local governments—the state itself doesn't use any of this money. Property taxes are based on the "just value" or market value of properties as they're assessed by a local appraiser as of Jan. 1 of each year.

Increases in value are limited to 3% of the previous year's assessment or the Consumer Price Index (CPI), whichever is less. This limitation is known as the "Save Our Homes" cap.

Taxes are based on millage rates set by local governments, with 10 mills being equal to 1%. The millage rate is multiplied by the value of the property to determine the dollar amount of the tax. County, city, and school districts are permitted to levy taxes at up to 10 mills each.

Property Tax Exemptions

Florida offers several property tax exemptions that can help reduce your tax bill if you qualify for them. They include a homestead exemption of up to $50,000. Exemptions are also available for older adults over age 65 and for the disabled.

Veterans can qualify for four different types of exemptions, and widows and widowers are entitled to a $500 exemption, provided that they haven't remarried and weren't divorced at the time of their ex-spouse's death. Homeowners who are legally blind are also entitled to a $500 exemption.

Personal Income Tax

Florida is one of only seven states that have no personal income tax. The state tax on intangible assets, such as stocks, bonds, and mutual funds, was repealed in 2007, so this type of property is no longer taxed, either.

State Corporate Taxes

The Florida corporate income/franchise tax rate was previously reduced from 4.458% to 3.535% for taxable years beginning on or after Jan. 1, 2021, but before Jan. 1, 2022. However, the corporate income tax rate has since increased back to 5.5% (where it was prior to 2019) for tax years beginning on or after Jan. 1, 2022.

Estate and Inheritance Taxes 

There are no "death taxes," otherwise known as inheritance taxes, in Florida on the value of estates or inheritances. The Florida estate tax was repealed effective Dec. 31, 2004, and it cannot be reinstated. The state's constitution prohibits it.

Sales and Other State Taxes

Florida sales taxes apply to several types of purchases:

• A stamp tax of 70 cents per $100 of value is assessed on documents that transfer interest in Florida real estate, such as warranty deeds and quitclaim deeds.
• A tax is also levied on notes, bonds, mortgages, liens, and other written obligations to pay that are filed or recorded in Florida. The rate for these types of contracts is 35 cents per $100 of value. Counties are permitted to add additional fees. 
• Florida charges a state sales tax of 6%. Food, prescription drugs, and non-prescription drugs are exempt from taxation, and amusement machine receipts are taxed at only 4%. Electricity comes with a tax of 6.95%, and counties can charge their own additional sales taxes.
• The Florida gas tax is actually exorbitant, offsetting some of the state's other tax breaks—at least for those who drive a lot. It's 43.35 cents a gallon, and this figure excludes the federal excise tax. Florida ranks eleventh for the highest gas tax in the country.
• The state charges a 133.9 cent tax on each pack of 20 cigarettes. There's also a surcharge for other tobacco products, excluding cigars, that's equal to 85% of the wholesale price.
• Hotel tax rates vary by county, ranging from 0% to 6%. This is in addition to the state sales tax rate of 6%. These taxes are known as the Tourist Development Tax and are charged on hotel rooms, but rooms that are leased for more than six months are exempt.

On the bright side, you can buy a flag in Florida—either the U.S. flag or that of the state—without paying any tax at all. 

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