You just moved to Florida. You're looking at your first paycheck from a job in Orlando or Miami, and something feels... missing. You scan the deductions. Federal tax? There. Social Security? Yep. But the line for state withholding is just a big, fat zero.
It’s not a glitch in the payroll software. Honestly, it’s the main reason Florida has become a magnet for everyone from remote tech workers to retirees. While residents in New York or California are waving goodbye to 5% to 13% of their earnings before they even see them, Floridians keep that cash.
But is it truly "tax-free"? Kinda. But not exactly.
The Truth About Florida Income State Tax
The most important thing to understand is that Florida income state tax doesn't exist for individuals because the state constitution literally forbids it. Specifically, Article VII, Section 5 of the Florida Constitution keeps the government’s hands out of your personal pockets.
Back in 1971, voters approved an amendment that drew a very clear line in the sand. It says the state can’t tax the "income of natural persons." That’s you. Me. Your neighbor. If you’re a human being living and working in Florida, the state cannot charge you a personal income tax.
However, there is a catch that catches business owners off guard. While "natural persons" are safe, "artificial entities"—basically corporations—are not.
Who actually pays?
If you run a C-Corp, you’re looking at a Florida corporate income tax rate of 5.5%. Most small business owners don't have to sweat this, though. If you’re an LLC, a sole proprietorship, or an S-Corp, the income "passes through" to you as a person. And since you’re a person, and Florida doesn't tax persons, you usually pay zero state tax on that business income.
If there's no income tax, how does Florida stay paved?
States are expensive. You’ve got roads to fix, schools to run, and a massive coastline to protect. If Florida isn't taking a bite out of your salary, where is the money coming from?
The answer is mostly tourists and shoppers.
The Sales Tax Engine
Florida relies heavily on a 6% state sales tax. But wait, it’s usually higher than that when you’re at the register. Most counties tack on their own "discretionary sales surtax," which typically pushes the total to 7% or 7.5%.
If you’re buying a $40,000 truck in Tampa (Hillsborough County), you're paying significantly more in sales tax than someone in a state with a high income tax but lower sales tax. It’s a trade-off. You aren't taxed on what you earn; you’re taxed on what you spend.
👉 See also: The Navigation Act: Why This 17th-Century Law Still Drives How We Move Goods Today
Tourism Taxes
Florida is the king of shifting the tax burden onto visitors.
- The "Bed Tax": Officially known as the Tourist Development Tax. If you stay in a hotel or an Airbnb, you’re paying an extra 2% to 6% depending on the county.
- Gas Taxes: Florida’s gas tax is among the higher ones in the country. If you’re driving to Disney, you’re funding the state.
The "Hidden" Taxes You Need to Watch
Just because there's no Florida income state tax doesn't mean the Florida Department of Revenue doesn't have other ways to reach into your wallet. If you're moving here thinking you've escaped all taxes, you might want to look at your property tax bill first.
Property taxes in Florida are staying pretty middle-of-the-pack nationally, but they can feel high if you're coming from a state like Alabama or Tennessee. The "Save Our Homes" cap helps permanent residents by limiting how much their assessed value can go up each year, but for new buyers, that first bill after the "reset" can be a total shock.
The Intangible Tax (The one that mostly died)
People used to freak out about the "Intangible Personal Property Tax." This was a tax on things like stocks, bonds, and mutual funds. It was a massive headache. Thankfully, the Florida legislature killed the annual version of this back in 2006.
Today, the only "intangible tax" you’ll likely see is a one-time fee when you take out a mortgage. It’s small—$2 per $1,000 of the debt—but it’s there.
Remote Work: The 2026 Reality
If you live in Florida but work for a company in a state like New York or Massachusetts, you might think you’re in the clear.
Not so fast. Some states have "convenience of the employer" rules. If your company is based in a state with that rule, they might try to tax your income even if you’re sitting on a porch in Pensacola. You’d still file a "zero" return for Florida (since there is no return to file), but you might owe the other state. It's a legal gray area that has led to some nasty surprises during audit season.
Actionable Steps for New Residents
If you’ve just moved to take advantage of the lack of Florida income state tax, you need to make sure you’ve actually "left" your old state in the eyes of the law.
- File a Declaration of Domicile: This is a formal document you file with the Clerk of the Circuit Court in your Florida county. It’s a "proclamation" that Florida is your permanent home.
- Swap Your Paperwork: Get your Florida driver’s license and register your car within 30 days. High-tax states like California love to audit "departed" residents who still keep an old license.
- Register to Vote: This is one of the strongest indicators of residency for tax purposes.
- Update Your "Situs": Move your bank accounts to Florida branches and make sure your "center of life" (doctors, lawyers, clubs) is physically in the state.
Florida is a fantastic place to build wealth because of this tax structure. Every dollar you don't send to Tallahassee is a dollar you can put into a 401(k), a local business, or just a few extra weekend trips to the Keys. Just keep an eye on those sales tax receipts and property assessments—they’re how the Sunshine State keeps the lights on.
To ensure you are fully compliant, your next move should be to download the DR-501 Homestead Tax Exemption form from your local county property appraiser’s website. Filing this by March 1st is the only way to lock in the "Save Our Homes" protection and lower your property tax burden, which is the "other side" of living in an income-tax-free state.