Florida does not have a state capital gains tax
Florida is one of nine states that does not tax capital gains at the state level. When you sell an investment — a stock, rental property, or business — for more than you paid for it, Florida will not take a cut of that profit. You will owe federal capital gains tax to the IRS, but the state itself collects nothing.
This applies whether you are a Florida resident or a non-resident who owns property in the state. The absence of a state capital gains tax is one reason Florida attracts retirees and investors, since it means more of your investment returns stay in your pocket compared to states that do tax gains.
Key Takeaways
- Florida has no state capital gains tax, so you will only owe federal capital gains tax to the IRS when you sell an investment at a profit.
- The federal tax rate on long-term capital gains ranges from 0% to 20% depending on your income, while short-term gains are taxed as ordinary income.
- Florida also has no state income tax, which means the state does not track investment sales the way income-tax states do.
- If you move to Florida from a state that taxes capital gains, you will stop owing that state's tax once you establish residency in Florida.
How federal capital gains tax works instead
Since Florida does not tax capital gains, the only capital gains tax you owe is federal. The IRS taxes gains differently depending on how long you held the investment. If you owned it for more than one year, it is a long-term capital gain and taxed at a preferential rate: 0%, 15%, or 20% depending on your total income for the year.
If you owned it for one year or less, it is a short-term capital gain and taxed as ordinary income — at your regular tax bracket, which can be as high as 37%. This is why investors often hold assets longer: the tax bill is smaller.
You report capital gains on your federal tax return using Schedule D (Form 1040). The IRS does not require Florida to report your sales to them, but your brokerage or the person who bought your property will report the transaction, and the IRS cross-checks that against your return.
What counts as a capital gain in Florida
A capital gain happens when you sell something for more than your cost basis — what you originally paid for it, plus any improvements. Common examples include selling stocks, mutual funds, bonds, real estate, or a business. You can also have capital gains from cryptocurrency, collectibles, or inherited property that increased in value.
Not every sale triggers a capital gain. If you sell something for less than you paid, that is a capital loss, which can offset other gains. If you sell your primary residence, you may not owe any tax at all: the IRS lets you exclude up to $250,000 in gains (or $500,000 if you are married filing jointly) if you owned and lived in the home for at least two of the last five years.
Dividends and interest you earn are not capital gains — they are ordinary income and taxed differently. Florida does not tax those either, since the state has no income tax of any kind.
Florida's lack of income tax and what it means for you
Florida has no state income tax and no capital gains tax. This is unusual: most states that do not tax capital gains still tax wages and salaries. Florida taxes neither. The state funds itself through sales tax, property tax, corporate tax, and other sources instead.
For investors, this means you do not have to file a state tax return or report your capital gains to Florida at all. You only file with the IRS. If you move to Florida from a state like New York or California that taxes both income and capital gains, you will stop owing that state's tax once you establish Florida residency — though you may still owe the old state tax on gains you realized before you moved.
Moving to Florida and your old state's capital gains tax
If you sell an investment while you are still a resident of another state, you owe that state's capital gains tax even if you move to Florida the next day. Residency is determined by where you lived when the sale happened, not where you live when you file the return.
Once you establish Florida residency — typically by getting a Florida driver's license, registering to vote, and establishing a permanent home here — you stop owing capital gains tax to your old state on future sales. However, your old state may challenge your residency claim if you still own property there or spend significant time there. If you are planning a move and have large gains to realize, consult a tax professional in both states before you sell.
Florida residency for tax purposes is not automatic. You have to take steps to show you intend to live here permanently: register your car, change your voter registration, update your address with banks and employers, and maintain a home in Florida. Some people maintain residency in multiple states, which can complicate their tax situation.
How to report capital gains on your federal return
You report capital gains to the IRS on Schedule D (Form 1040), which you attach to your main tax return. You list each sale separately: the date you bought it, the date you sold it, your cost basis, the sale price, and the gain or loss. If you have many transactions, you can use Form 8949 (Sales of Capital Assets) instead, which feeds into Schedule D.
Your brokerage will send you a Form 1099-B showing all your stock and mutual fund sales for the year. If you sold real estate, the buyer's title company will send you a Form 1099-S. Use these forms to fill out your Schedule D — the IRS receives copies too, so the numbers have to match.
If you use tax software like TurboTax or TaxAct, you can import transactions directly from your brokerage, which saves time and reduces errors. If you work with a tax preparer, bring all your 1099 forms and any records of cost basis, especially for inherited property or assets you bought years ago.
Frequently Asked Questions
Do I owe Florida tax if I sell a rental property in the state?
No. Florida does not tax capital gains on rental property sales, even if you are a non-resident. You will owe federal capital gains tax, and possibly tax to your home state if you live elsewhere, but not to Florida.
What if I inherited property in Florida — do I owe capital gains tax when I sell it?
You owe federal capital gains tax only on the increase in value after you inherited it. Inherited property gets a "step-up in basis," meaning your cost basis is the property's value on the date of death, not what the original owner paid. If you sell it shortly after inheriting it, you may owe little or no federal tax. Florida does not tax the gain either way.
Does Florida tax cryptocurrency gains?
No. Cryptocurrency is treated as property for federal tax purposes, so you owe federal capital gains tax when you sell it at a profit. Florida does not tax the gain. You must report it to the IRS on Schedule D just like any other asset sale.
If I move to Florida, do I have to pay my old state's capital gains tax on sales I make after I move?
No, as long as you have established Florida residency. Your old state can only tax gains you realized while you were a resident there. Once you move and change your residency, future gains are not subject to your old state's tax. However, your old state may challenge your residency claim if you still own property or spend significant time there.
Can I deduct capital losses on my Florida return?
Florida does not have a state return, so there is nothing to deduct from. You deduct capital losses on your federal return only. You can use losses to offset gains, and if losses exceed gains, you can deduct up to $3,000 against ordinary income in a single year, with the remainder carrying forward to future years.