Warm beaches and pleasant year-round weather are enough to lure a lot of people to Florida. But, for young people looking to settle down, the Sunshine state also offers some tasty financial incentives. Florida's generous tax code means you could give less money to the government and keep more for yourself.
The biggest advantage of being a Florida resident -- from a tax perspective at least -- is Florida charges no state income tax whatsoever for individuals. This is one reason -- the weather being the other -- that Florida attracts a lot of people near or at retirement age. Even if you're far from that point, keeping more money in your pocket will help you build your wealth. This break doesn't apply if you're moving a business there -- Florida slaps a 6 percent tax on corporations.
Real Estate Taxes
Florida's generous property tax laws make it an ideal location for young people looking to set down roots. As of 2012, Florida boasted a homestead tax exemption that made the first $25,000 of a home's value exempt from all city and county taxes. The next $25,000 only takes on school taxes. According to the Sarasota (Florida) County Property Appraiser's website, the homestead exemption was created in response to the Great Depression. Back then, it was Florida's way of helping out property owners who couldn't afford to pay their taxes. Now it's one more reason some people move to Florida.
As of 2012, Florida also had no place for state inheritance taxes. Simply put, this means you won't have to pay state taxes on any money willed to you. This is the source of jokes you may have heard about someone being named the beneficiary of an estate and then packing up for Florida. It's also nice on the family member leaving you the inheritance since he knows more of the estate will stay in your hands.
An estate tax is similar to an inheritance tax, except it's paid by the estate of the deceased -- not the inheritor. Hopefully, you won't kick the bucket for a long, long time -- but if something does happen to you, you don't want the money you leave your loved ones to be eaten away by taxes. Florida kicked the estate tax to the curb on December 31, 2004. In contrast, the state of Maryland imposes a 16 percent tax on any assets over $1 million left to a loved one -- including your partner if you're not hitched. This seems like a high threshold when you're young, but it includes your property, investments and even certain insurance payouts -- so your estate may be worth more than you expect.
- Ferguson, Skipper, Shaw, Keyser, Baron and Tirabassi: Tax Advantages of Residence in Florida
- Florida Department of Revenue: Florida's Estate Tax
- Florida Department of Revenue: Tax Information for New Residents
- Business Insider: Do Millionaires Vote With Their Feet?
- Florida Department of Revenue: Homestead and Other Exemptions
- Sarasota County Property Appraiser: Frequently Asked Questions
- Comptroller of Maryland: What You Need to Know About Maryland Estate Tax
- Is My Tax Preparer Responsible for Mistakes?
- Do You Pay Taxes on Pensions From the State You Retired In or the State You're Living In?
- Is My Pension Subject to State Taxes?
- Do You Pay State Income Taxes Based on Where You Lived or Where Your Income Was Earned?
- How to Know If You Have to File City Taxes
- How to Know If I Need to File State Taxes
- What States Do Not Tax Equity Market Gains?
- Do Retired People Pay Less on Property Taxes?