If you’re a Florida resident, you probably find plenty to love about the state, from its climate and beaches to its theme parks and top-notch cuisine. But there might be a few unique aspects of Florida life you find less exciting, starting with its state taxes.
Are Florida’s taxes more or less than those in other states? If you live in Florida, are you getting a good return on your state tax investment so you can get ahead financially ? We answer these questions and more in our guide to Florida’s state taxes.
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1. State income taxes
Only seven states are entirely free of a state income tax, and Florida happens to be one of them. Even better, Floridians have an even smaller state tax burden than residents of some other income-tax-free states.
For instance, while Washington lacks a general state income tax, the state still levies a tax on capital gains for high earners. Florida doesn’t tax any aspect of its residents’ incomes, period.
Own a car? Here's 7 warning signs you're paying too much for car insurance. 2. Property taxes
Out of all 50 states and Washington, D.C., Florida's effective property tax rate of 0.91% was the 26th-highest in the nation — Hawaii has the lowest property tax rate at 0.32%, while New Jersey has the highest at 2.23%. However, Florida’s low property tax rate hits differently depending on the home values in the city where you own property.
Florida’s real estate boom and cost of living meant the median home value (or list price) for a house in the state was $711,100 in 2022, and the average annual property tax was $6,489.40. As a result, residents of states with higher property tax rates but lower costs of living ended up paying far less in annual property taxes than the average Floridian.
In Texas, for instance, the property tax rate is 1.68% — not quite double Florida’s rate but substantially higher. (Texas has the 46th-highest property tax rate in the nation.) But because the median home value in Texas is much more affordable at $284,800, the average annual property tax payment is just $4,776.81.
3. Capital gains taxes
Florida doesn’t tax capital gains. No matter how much you earn on investments and interest this year, you won’t lose any part of it to state taxes.
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4. Estate taxes
Like most other states, Florida doesn’t impose an estate tax. You can leave an inheritance to your kids without worrying they’ll have to give up a portion of the estate to the state of Florida.
5. Fuel taxes
As with property taxes, Florida’s fuel taxes are just barely above average compared to the rest of the United States. The average gas tax across the nation is around $0.50 per gallon, but Florida’s average per-gallon tax comes to $0.365.
While the average U.S. diesel tax comes to $0.24 per gallon, Floridians pay an average of just $0.374.
6. Social Security taxes
Seniors in Florida avoid throwing away money on Social Security taxes. Most states don’t tax your Social Security earnings, and — you guessed it — Florida is among them. Even though the state has a large population of seniors, it doesn’t take a cut of their Social Security benefits.
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Florida imposes a flat sales tax rate of 6% on nearly all goods and services in the state. A handful of products have a lower tax rate, including amusement machine receipts (4%) and commercial property renting, leasing, or licensing (4.5%). Electricity is the only commodity taxed at the slightly higher rate of 6.75%.
Finally, two items don’t incur sales taxes at all when purchased in Florida — the American flag and the Florida state flag.
8. How to file taxes in Florida
There’s more good tax news for Florida residents: Since you aren’t taxed by the state, you don’t have to file any tax paperwork with the state. The Florida state website does provide a link to the government’s tax e-filing site if you need to file taxes in any other state.
Do you get what you pay for in Florida?
It’s time for the moment of truth. Do Florida taxpayers get a solid return on their investment, or does their tax burden fail to yield many positive results?
Thanks largely to Florida’s nonexistent income tax, the state ranks second in the nation in terms of securing a solid return on tax dollars. While the minimal state taxes mean Florida doesn’t have the resources to offer many government services, its low tax burden ensures state taxpayers have a little extra money in their pockets come tax season.
Plus, even without revenue from income taxes, Florida still manages to have the eighth-best roads and 15th-best bridges in the country. With rock-solid infrastructure and fewer taxes than most anywhere else in the nation, it’s easy to see why Florida is a top spot for retirees looking to make the most of their golden years stress-free .
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Bottom line
Sunshine isn’t the only thing that makes Florida a popular destination. Having more cash in your wallet from not facing state income taxes, capital gains taxes, and Social Security taxes can make for a comfortable living situation, as long as you keep overall living costs in check.
Money tips that can work for everyone
No matter what your bank account balance is, there's always an opportunity to optimize and improve your finances. Here's a quick checklist of things you can look at today.
Focus on paying off your debt. Debt can hold you back from making progress with your overall financial well-being. Aside from cutting expenses, there are tools that can help you pay off debt faster like balance transfer credit cards and debt counseling.
Earning extra income can give you breathing room. If finances are tight, earning some extra money to supplement your income can make a huge difference. A new job is one option to consider, but if you're not ready to make a big change or already retired, a part-time side job could be a better choice.
Cut your expenses. It sounds painful and so not fun, but it doesn't have to be. Take a look at your biggest expenses because that's where you'll probably find the biggest savings. For example, auto insurance rates have been soaring so shopping around for a new insurance company can be the fastest way to cut your bill. Also, look for ways to cut your grocery bill (despite rising inflation).
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