Thinking of moving to Florida?

One of the many reasons why people move to Florida is for it’s tax regulations. That’s because Florida offers numerous tax advantages compared to other states.

Given the potential cost savings that these tax breaks give, we’ve outlined everything there is to know about them.

1. There’s No State Income Tax

State income tax can be a massive charge, but this cost is not something that Florida residents have to worry about. That’s because wages, retirement income, and investment earnings won’t have state tax applied to them.

This could be a massive relief for anyone moving to Florida from states that have a high income tax rate since their weekly earnings will likely be higher and more could be put away for retirement without worry.

Just keep in mind that federal tax is still charged and Florida residents still need to file their federal return for it each year.

2. Property Taxes Are Important

Since the state of Florida does not collect personal income tax, property tax tends to be a major source of income for the State as it is used to fund things like emergency services, schools, and roads.

This means that the tax rate tends to be slightly higher, and is therefore a potential cost to account for.

3. The Homestead Exemption Can Offset Costs

To avoid a potentially hefty property tax bill, Florida state residents are recommended to apply for the homestead tax exemption. This exemption is available to anyone who has a primary residence in the state of Florida. If approved, the break could deduct up to $50,000 from a home’s taxable value which will, in turn, drop the property tax bill due on it.

In addition to this exemption, Florida residents also benefit from the Florida Save Our Homes cap. This regulation limits the amount that a property’s assessed value can increase each year, ultimately helping to keep property tax as low as possible for the people of Florida.

4. State Sales Tax Still Applies

Although the state does not charge personal income tax, residents still need to pay state sales tax. The current sales tax rate in Florida is 6%, but many counties add a local surcharge which could result in a higher overall rate being applied. However, this is dependent on exactly where the person lives and the shop that they are at.

Keep in mind that this tax applies to nearly all retail goods and services, so it’s important to consider when working through household budgets.

5. Retirement Income Is Not Taxed

Every year, thousands of retirees flock to Florida simply because of its relaxed tax laws. Retirees can enjoy a state tax break on things like Social Security benefits, pension income, IRA withdrawals, and 401(k) distributions. But, although state tax is not charged, federal government tax will still be applied.

If you’re new or thinking of moving to Florida, consider giving us a call at A.P. Accounting and Tax Services. Our experienced team will help you understand Florida’s unique tax rules and work with you to apply them.

Image: Unsplash