There is nothing new about people relocating to different states and countries for better opportunities, a new lifestyle, or an improved quality of life. That’s the reason why a lot of people (21.6 million to be precise) are currently living in Florida.
The year-round sunshine and the picturesque beaches are not the only things that make the Florida state a popular choice for relocation. Favorable tax benefits attract thousands of people to the Sunshine State each year, and one notable reason is the Florida income tax rate of 0% that tops them all.
Apart from the picture-perfect beautiful beaches and warm weather, Florida has a lot to offer its residents. The Tax Cuts and Jobs Act (TCJA) of 2017 provides excellent tax incentives for Florida residents. This benefits older and young taxpayers alike as well as middle-income families. Here are the top 5 tax privileges of being a Florida resident that will help you realize why moving to Florida makes a lot of sense.
1. No Income Tax
You will save a lot from income tax levied against your earned income as the Florida income tax rate is 0%. It is definitely a great incentive for those relocating to FL. It is one of the only nine states in the US that do not collect income taxes. The other states are Nevada, Alaska, South Dakota, New Hampshire, Wyoming, Washington, Texas, and Tennessee. If you reside in a country or state with a higher income tax level than 0%, and many other states charge you between 3%-9%, you can potentially save thousands of dollars in taxes by becoming a Florida resident.
In addition, the state also has a sales tax, but it is relatively low compared to other states. Retirees who are 65 and above and who have lived in Florida for at least 25 years may be eligible for a sales tax exemption on certain items, such as prescription drugs and groceries.
For these reasons, Florida is a popular retirement destination. Many retirees can save significant money by moving to this state, which can help them stretch their savings further. If you want to live in Florida, you can check Chatburn Living and other reputable property listing websites to find a property fit for your needs.
2. No Tax On Retirement Benefits
If you are a retired senior citizen, Florida might have a lot to offer you. You not only get to enjoy mesmerizing beaches and warm winters, but you can also savor the fruits of your lifelong labor without paying any tax. Florida is very tax-friendly for retired people. So if you want to work part-time, you won’t have to pay various taxes. Here are some of the incomes that the state of Florida exempts from taxation for retirees:
- Personal income from part-time work
- Social security income
- Retirement account withdrawals
- Public and Private pension income
Finding part-time work in Florida can be a great way to stay active, meet new people, and make extra money. Many online job boards list part-time jobs available in the state. These platforms can help you compare salaries and benefits. Retirees with teaching experience may be able to find part-time jobs as substitute teachers, tutors, or adjunct professors. Also, Florida’s local government websites often list part-time job openings without one worrying about taxes. Retirees can earn up to USD$1,000 per month without paying state income tax.
3. Business Tax Benefits
The business-friendly policies have helped Florida to become one of the most sought-after business destinations. The tax system adopted by Florida creates a favorable business environment for both small and large businesses. The state estimates it is providing more than $168 million in taxpayer savings for families and businesses. Here are some of the business taxes you either don’t pay or you get tax breaks and incentives on:
- Corporate franchise tax on capital stock
- Sales tax on the procurement of raw materials
- Corporate income tax on limited partnerships
- Property tax on business inventories or goods-in-transit
- Insurance premium tax advantages
The state of Florida also offers various environmentally-minded tax exemptions designed to help those that utilize clean energy. Some of the business resources exempted from taxation are:
- Natural gases used to generate electricity
- Solar energy systems
- Electricity or steam used in manufacturing
4. Property Tax Benefits
Florida has a relatively low property tax rate, saving homeowners a significant amount of money. Retirees who are 65 or older and who have lived in Florida for at least 25 years may be eligible for a property tax exemption on their primary residence.
If you buy a house in Florida and declare it your primary homestead, you can receive two property tax exemptions. You will receive the first exemption on the first $50,000 of the home value from property taxation.
The ‘Save Our Homes’ Act amends to the Florida constitution that limits the annual growth in the assessed value of homesteaded properties to 3% or the variation in the national Consumer Price Index(CPI), whichever is less.
5. Inheritance and Estate Tax Benefits
Florida has attractive benefits for wealthy individuals who have inherited property and wealth. The state of Florida does not have an inheritance tax which is also called “death tax.” The residents of Florida and their heirs do not owe any estate taxes to the state. It helps to reduce the tax liability if you are wealthy and own valuable real estate.
The federal government has an inheritance tax, but it only applies to estates worth more than USD$12.06 million in 2023. This means most people who inherit property in Florida need not pay inheritance tax.
This is a summary of some of the tax benefits you can enjoy if you become a resident of the Sunshine State of Florida. So get ready to live an unmatched quality of life in a beautiful climate with a low cost of living, and no income taxes.
