What New Floridians Should Know About Our Tax Rates
High earners have flocked to Florida over the past few years. Here’s the story about low taxes, cost of living and population growth.
Florida ranks eighth in the nation as a destination for new residents — but one think tank noticed something interesting about who was coming to live here. The Tax Foundation published a report this fall showing that Florida was the nation’s top destination among taxpayers earning at least $200,000 in adjusted gross income. These taxpayers also tended to move to Florida from states with higher taxes, such as New York, California and New Jersey.
Taxes may not be the only reason someone would choose to move across state lines, but they are definitely of interest to most. With this in mind, we checked in with SBF tax professionals Dayanara and Djordje for a quick rundown of what makes the Sunshine State so attractive to people moving from other states.
1) Where does Florida stand overall in the country when it comes to tax burdens for individuals and businesses? What makes it especially attractive compared to different regions of the U.S.?
Florida is one of the few states that does not have a state personal income tax requirement. Florida also has relatively low sales taxes, property taxes and corporate income taxes when compared to some other states, like California or New York. Also, the state’s corporate income tax rate is 5.5 percent. Paying lower taxes means there is more capital in the business owner’s pocket to fuel further investment in other ventures.
For individuals, the lack of a state income tax means none of their taxable Social Security benefits, for example, are taxed at the state level.
2) How does Florida rank on taxes for out-of-state businesses? What makes it attractive for interstate business?
Business owners of a partnership or S-corporation in Florida will be taxed on their earnings only at the federal level. Income generated from the business flows through their individual return and won’t be subject to state income tax in Florida. And if the taxpayer owns a C-corporation, the business will be taxed at a relatively lower corporate tax rate (5.5 percent) as compared to other states.
3) What’s the best way for an accountant to help new residents from out of state learn about their Florida tax situation? What should people know going in?
Planning ahead and communication are key. An accountant can help new residents understand the major differences in Florida tax code in comparison to the state they moved from. Once the differences are identified, the accountant and taxpayer can agree to a plan to take advantage of the low taxes and generate wealth for the taxpayer.
4) What’s something surprising about Florida tax law that’s unique to the state?
Have you ever wondered how Florida can afford to keep their relatively low tax rates and charge no income tax to its residents? Florida’s nice and warm weather — along with its beautiful beaches, theme parks and wide variety of attractions — makes the state a top destination for visitors from other states and other countries. And these tourism dollars make a lot of these tax benefits possible for residents. Out-of-state readers, if you haven’t been to the Sunshine State, you should consider visiting soon.
