Florida does not have a state income tax

Florida is one of nine states with no state income tax. That means the money you earn from a job, a business, or investments does not get taxed by the state of Florida — only by the federal government. If you move to Florida from a state that has income tax, or if you work remotely for a company in another state, you will not owe Florida state income tax on your wages.

This applies to W-2 wages, self-employment income, retirement distributions, and investment gains. The only exception is that Florida does tax certain types of retirement income under specific circumstances, which is covered below.

Because Florida has no income tax, the state funds itself through sales tax, property tax, corporate tax, and other sources. Your paycheck will reflect federal withholding but no state withholding for Florida purposes.

Key Takeaways

  • Florida residents pay no state income tax on wages, self-employment income, or most retirement distributions.
  • Federal income tax still applies — the absence of state tax does not mean you owe nothing to the government.
  • If you move to Florida, you do not need to file a Florida state income tax return, though you still file federal taxes.
  • Florida does tax certain retirement income in limited cases, such as distributions from IRAs or 401(k)s taken before age 59½ in some situations.
  • Sales tax in Florida is higher than in many states with income tax, so the overall tax burden depends on your spending and income mix.

What income is not taxed in Florida

Wages from employment, self-employment income, rental income, and capital gains are all free from Florida state tax. If you own a business in Florida, you do not pay state income tax on your business profits. If you sell a house or stock at a gain, Florida does not tax that gain.

Retirement income is largely untaxed as well. Distributions from a 401(k), traditional IRA, Roth IRA, or pension are not subject to Florida state income tax. Social Security benefits are not taxed by Florida either. This makes Florida attractive to retirees who receive pension or retirement account withdrawals.

Interest and dividend income from savings accounts, bonds, and stocks are also free from Florida state tax. The only tax you owe on this income is federal tax.

The one exception: certain retirement distributions

Florida has a narrow exception for retirement income. If you withdraw money from an IRA or 401(k) before you turn 59½, and that withdrawal is not a may have access to distribution (such as a hardship withdrawal or a Roth conversion), Florida may tax that income. However, this rule applies only if you did not live in Florida when you earned the income that funded the account.

In practice, this exception affects very few people. Most retirees and most early withdrawals fall outside this rule. If you are concerned about whether a specific withdrawal might be taxed, contact the Florida Department of Revenue or speak with a tax professional who knows Florida law.

Distributions from a Roth IRA are never taxed by Florida, regardless of your age or when you made the withdrawal. may have access to distributions from a traditional IRA or 401(k) — those taken after age 59½ — are also always free from Florida tax.

How federal tax still applies

The absence of Florida state income tax does not mean you owe no income tax at all. You still owe federal income tax on all the income sources listed above. Your employer will withhold federal tax from your paycheck, and you will file a federal tax return each year with the IRS.

When you file your federal return, you report your income, deductions, and credits the same way you would if you lived in any other state. The only difference is that you do not file a separate state return or owe state tax on that income.

Self-employed people in Florida still owe federal self-employment tax and federal income tax. They straightforward do not owe Florida state income tax or Florida self-employment tax.

Sales tax and property tax offset the lack of income tax

Florida funds state services through sales tax, property tax, and corporate tax instead of income tax. The state sales tax rate is 6%, but counties can add their own sales tax on top of that, bringing the total to between 6% and 7.5% depending on where you live. This is higher than the national average.

Property tax in Florida varies by county but is generally moderate compared to other states. However, if you own a home, you will pay property tax every year, whereas renters do not.

Whether the lack of income tax saves you money overall depends on your income level and how much you spend. High earners who spend little may come out ahead. People with modest incomes who spend most of what they earn may pay more in sales and property tax than they would have paid in income tax elsewhere.

What to do if you move to Florida

If you move to Florida from another state, you do not need to file a Florida state income tax return. You will no longer owe income tax to your former state once you establish Florida residency, though some states require you to file a part-year return for the year you moved.

To establish Florida residency for tax purposes, you generally need to live in Florida for more than half the year and have a permanent home there. Once you meet these requirements, you are considered a Florida resident and do not owe Florida income tax on income earned after you moved.

If you work remotely for a company in another state but live in Florida, you owe no Florida income tax on your wages. You owe only federal tax and any tax owed to the state where your employer is located, depending on that state's rules.

Remote workers and out-of-state employment

If you live in Florida and work for an out-of-state employer, Florida does not tax your income. You owe federal tax and potentially tax to the state where your employer is located, but that depends on each state's rules — many states do not tax income earned by residents who work remotely.

If you are self-employed and serve clients in other states, you do not owe Florida income tax on that income. You owe federal self-employment tax and federal income tax. You may owe income tax to the states where your clients are located, depending on those states' rules and the nature of your work.

Keep records of where you live and where you work. If you move to Florida mid-year, you may need to file a part-year return in your former state, and your new employer may need to update your tax withholding.

Frequently Asked Questions

Do I still file a federal tax return if I live in Florida?

Yes. Florida has no state income tax, but you still owe federal income tax. You file a federal return with the IRS each year if your income exceeds the filing threshold. Your employer withholds federal tax from your paycheck.

Is Social Security taxed in Florida?

No. Florida does not tax Social Security benefits. However, the federal government may tax a portion of your Social Security depending on your total income and filing status. That is a federal rule, not a Florida rule.

What if I moved to Florida partway through the year?

You do not owe Florida income tax for the year you moved, since Florida has no income tax. However, your former state may require you to file a part-year return for the months you lived there. Contact your former state's tax agency to confirm.

Does Florida tax retirement account withdrawals?

Most retirement withdrawals are not taxed by Florida. The exception is narrow: early withdrawals from traditional IRAs or 401(k)s taken before age 59½ may be taxed if you did not live in Florida when you earned the income. Roth IRA withdrawals and may have access to distributions are never taxed by Florida.

Is the sales tax in Florida higher because there is no income tax?

Florida's sales tax is higher than the national average, and the lack of income tax is one reason the state relies on sales tax. However, sales tax rates vary by county. Whether you pay more or less in total taxes depends on your income, spending, and whether you own property.