If you've just moved to Florida, it might seem like you've landed in paradise, but you still have to pay taxes, lots of them. Florida taxes are complex, just as they are in any other state. Here's a snapshot with a brief explanation of how residents of the Sunshine State are affected by income tax, sales tax, property tax, and closing costs on real estate.
State Income Tax
Here's the good news: The state of Florida has no income tax. It is one of a few states in the nation that does not assess an income tax on its residents. Of course, you'll still need to pay federal income taxes to keep Uncle Sam happy, but there's no need to mail an annual check off to Tallahassee. This also makes filing your taxes a little easier every April 15.
Estate and Intangibles Tax
More good news: Florida does not collect an estate, or inheritance, tax. Florida does not take one penny of what's left to beneficiaries no matter how large the inheritance is. You also are free from paying taxes on intangibles (like investments) in Florida.
Here's the bad news: You won't get off as easily when it comes to property taxes. Florida has some of the highest property tax rates in the nation. The state of Florida does not collect property taxes. Local governments collect these taxes, and rates vary depending on where you live. Florida residents can take advantage of a number of property tax exemptions designed to provide you with a discount on your property taxes. Most homeowners are eligible for at least one of these exemptions on their primary residence, and many Florida residents qualify for other property tax discounts based on age, disability, and veteran status.
Florida Sales Tax
Florida law mandates a minimum sales tax rate of 6 percent on retail sales, storage, or rentals, collected by the state government to provide services to all Floridians. Most groceries and medicines are exempt from sales tax. The sales tax law also allows each county to set its own local tax that is collected on top of the general state rate. Most counties adopt an add-on local tax, and that generally is less than 2 percent. Practically speaking, it means that you could pay a higher tax rate in some Florida counties than you do in others.
Mortgage and Recording Taxes
Closing costs are a major factor when considering a home purchase no matter what state you live in. Closing costs in major Florida cities average just a bit more than the national average. Since this number is a percentage, the higher your mortgage loan amount, the more you pay in closing costs.