Florida Tax Advantages for Retirees & Seniors

Steven Fenyves |
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Florida is one of the tax-friendliest states in the country for seniors and retirees. Whether you are thinking of moving to Florida for retirement or are already enjoying the sunshine state and want to be certain you are receiving all of your senior tax benefits,

Florida’s tax policies are specifically tailored for the 21% of residents over 65 that has helped make it the country’s preeminent retirement destination.

It's not just the warm weather, excellent healthcare, countless golf course and beaches. In retirement when you have to make every penny of your savings last, Florida’s tax advantages for retirees can make a very significant contribution to lowering your annual cost of living, enhancing your quality of life and financial well-being.

How? Florida’s tax policies are specifically designed to reduce the tax burdens of retirees, giving you more freedom to do what you want with your money.

Florida has no state income tax, no inheritance tax, and no estate taxes. Average property taxes are below the national average with qualifying seniors having property tax benefits. There is no sales tax on what are many seniors’ major cost of living expenses like groceries and medicine.


No State Income Tax

Florida is one of the very few states in the nation that has no state income tax. This means you don’t have to pay state income tax on Social Security, IRA distributions or 401 K withdrawals.

This is also true for investment income with there being no state capital gains tax. And no state tax for lottery winnings.

With Florida having no income tax on the state or local level, this minimizes the tax burden on seniors who are usually drawing from these sources of income in retirement. Florida residents still have to pay federal income taxes, but having no state income tax is only one of the ways Florida’s tax advantages for retirees makes it so favorable as a retirement haven.

By not having to worry about state income taxes it gives retirees more flexibility and freedom managing their retirement account withdrawals and other income.


Florida Has No Inheritance Tax

Nobody stays young forever and none of us are promised tomorrow! Seniors know that better than most and is the age group most actively engaged in estate planning trying to manage their wealth to pass onto their heirs.

Inheritance taxes in many states can be a considerable tax burden. Another Florida tax advantage for retirees is the ability to avoid any state estate taxes and thereby pass more of your wealth on to your loved ones.


No Estate Tax

Florida also has no estate tax, simplifying estate planning and the costs associated with that. Only the federal estate tax applies when the estate exceeds the federal threshold of $12.92 million per individual in 2024.      


Property Tax Exemptions for Qualifying Seniors

While property tax rates vary across the state, Florida’s average effective property tax rate is 0.83% which is below the national average of 1.11%. Alachua County has the highest property tax rate at 1.07%.

The median Florida property tax paid is $2,616, however this can vary widely from county to county.  But beyond lower property taxes there are several important Florida tax advantages for retirees.

For seniors aged 65 and older the homestead exemption can reduce the taxable value of your primary residence by up to $50,000. This can result in significant savings on property taxes of hundreds of dollars a year.  The average Florida homestead tax deduction is about $800.

The Florida Department of Revenue publishes its eligibility requirements here: Property Tax Exemption for Homestead Property.  


Save Our Homes Senior Tax Benefits

One of the purposes of Florida’s Save Our Homes tax benefits is to protect seniors from sharp property tax increases resulting from rising property values. A long-term benefit of the homestead exemption is that after the first year of qualifying, the assessed value of the property cannot be increased by more than 3%, or the percent change in the consumer price index, whichever is less.


Portability of Homestead Exemption to New Property

If a senior homeowner is moving from one primary residence that has qualified for the homestead exemption to a new residence they may have tax benefits that are “Portable” to the new residence.

After the first year a home receives the homestead exemption, its assessed value for each following year cannot increase more than 3%. The accumulated difference between the just value and the assessed value is the Save Our Homes Benefit.

If you are moving from a previous Florida homestead to a new homestead in Florida, you may be able to transfer, or “port,” all or part of your homestead assessment difference, lowering the tax assessment and taxes for the new homestead.

For more Information: Florida Department of Revenue – Save Our Homes Assessment Limitation and Portability Transfer


No Property Taxes for Retirement Community Living

Many Florida retirement community residents pay zero property taxes on their residence. Every 55+ living communities’ resident agreements are different, but in addition to these tax advantages active adult community living offers many advantages that enable a retiree to live much more affordably than the monthly expenses and maintenance costs of owning a home.

Florida leads the country in this type of retirement living in communities where residents pay no property taxes on their residence.


Sales Tax

The Florida state sales tax rate is 6.0% with most counties adding a .05 to 1.5% surcharge.

Many seniors’ largest monthly expenses are groceries and medicine. Florida doesn’t tax most groceries except for foods sold for immediate consumption like in a restaurant.

Prescription and nonprescription drugs are not taxed. Most over the counter medical items like dental care and medical equipment are not taxed.


Sales Tax Holidays

Florida periodically offers sales tax holidays for limited periods of time for certain products that can range from disaster preparedness to clothing or tools.

Florida is being hit by climate change with rising costs of property insurance and protection becoming a significant expense that should be considered in your retirement plans.

The state offers sales tax holidays for a wide range of classes of goods. For example, during two fourteen-day periods in June and August disaster preparedness products are exempted.

These Florida tax benefits covers a wide range of products such as impact resistant glass as a tax benefit to help offset these costs. Or a week in September when tools are exempted from sales tax to help install these measures.

Being aware of when these Florida Sales Tax Holidays occur and what is being exempted can save 6 to 7.5% sales taxes during these limited time periods.


183 Day Rule to Establish Tax Residency

Many retirees split their time between a Florida retirement home and another location. To establish Florida tax residency to avoid state income tax in another state, check with that other state’s laws on this.

Most states go by the “183 Day Rule”. This requires you to live in Florida at least 183 days of a year to establish residency and avoid paying state income tax in another state.


Florida is an Extremely Tax-friendly State for Retirees

Florida’s tax advantages for retirees can add up to significant savings each year that simplify your life and stretch your retirement savings giving you more choices and freedom.  

Florida’s tax benefits that are specifically tailored for seniors contributes significantly to lowering overall living costs giving you more money and freedom to do the things you want in retirement!

Be sure to get the advise of a Florida-based Financial Advisor or Financial Planner to make the most of your retirement experience.

 

Would You Like to Know More?

Steven Fenyves, CFP®, CFS, founded Valued Wealth Management in 2005. He and his team of professionals help successful professionals prepare for retirement on their terms and stay comfortably retired. They also design corporate retirement plans to serve businesses and their employees.

Steven graduated from Hofstra University with a BA in Accounting. He holds the Certified Financial Planner™ (CFP®) designation and he is also a Certified Fund Specialist (CFS).

Deeply involved in his community, Steven sits on the Professional Action Committee for the Anti Defamation League and is a member of the Greater Boca Raton Estate Planning Council.
 

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