Florida Retirement Taxes
The Sunshine State is one of the ultimate retirement destinations for seniors. It has famously pleasant weather, countless golf courses and beautiful beaches. Florida’s tropical lifestyle can be a big draw for retirees who are done with snow and ice.
But warm winters and green fairways aren’t the only reason people 65 and older comprise more than a fifth of Florida’s population, one of the highest percentages in the U.S. The state’s tax system is an equally large factor.
Florida has no income tax, which means all forms of retirement income (including Social Security) are tax-free at the state level. It doesn’t end there, however. While most income tax-free states make up for the lost revenue with high taxes on property or sales, Florida’s sales and property tax rates are close to the national average.
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Is Florida tax-friendly for retirees?
Florida is extremely tax-friendly, as it boasts no state income tax, which means Social Security income, pension income and income from an IRA or 401(k) all goes untaxed. That alone could mean thousands in tax savings for retirees as compared with other states. Additionally, Florida has no estate or inheritance tax.
Is Social Security taxable in Florida?
The state of Florida won’t tax your Social Security income at all.
Are other forms of retirement income taxable in Florida?
Florida has no state income tax. That means any earnings, whether from wages, pensions or retirement accounts, are tax-free at the state level. Even if you have an IRA in which you have accumulated savings over the years through income in another state, if you move to Florida, your withdrawals will not be taxed.
How high are property taxes in Florida?
Although property taxes are one of the main sources of revenue for local governments in Florida, property tax rates are not especially high. The state’s median effective property tax rate is 0.86%, just below the U.S. median of 1.01%.
At $248,700, the median home value in Florida is lower than the national median ($281,900). That's fairly neutral news for seniors, who tend to spend a significant portion of their income on housing. Keep in mind, however, that in some areas, such as the city of Miami, housing costs are much higher than elsewhere in the state.
What is the Florida homestead exemption?
Florida’s homestead exemption is available to Florida homeowners and can be applied toward their principal residence. It exempts $25,000 of a home’s assessed value from property taxes, with an additional exemption of $25,000 for your home's assessed value between $50,000 and $75,000 for non-school property taxes.
Depending on your local property tax rate, the homestead exemption could mean hundreds of dollars in tax savings per year. In some Florida counties, senior citizens ages 65 and over could qualify for an additional homestead exemption of up to $50,000.
In fact, some counties or municipalities may allow senior citizens with income below a certain level to exempt the entire value of their property from taxes. Contact your local board of county commissioners or municipal government to see if you're eligible.
How high are sales taxes in Florida?
When considering both state and local rates, sales taxes in Florida are pretty close to the national average. The statewide rate is 6%, and the maximum total rate, including local taxes, is 8.25%. Those rates do not apply to groceries or medicine, however, which are two major expenses for seniors.
What other Florida taxes should I be concerned about?
There really isn't anything else to be worried about, as Florida does not levy an estate or inheritance tax.
