Florida, with its moderate climate, abundant sunshine, and beaches, has long been one of the most popular retirement destinations in the U.S. Florida has another plus for retirees – its low state tax burden. The Tax Foundation ranked Florida 47th among the states in terms of the overall state and local tax burden for 2008.
Florida is one of the few states with no personal state income tax. And according to the Retirement Living Information Center, since 2007 you are no longer required to file an annual intangible personal property tax return to report your stocks, bonds, mutual funds, or money market funds.
Florida property taxes
Property taxes on your home in Florida are based on the just or fair market value of the property. These ad valorem taxes are assessed and collected by the county property appraiser, and the individual counties in Florida assess the mill rates. The Florida Property Valuations and Tax Data Book provides a list of millage rates by county, which vary considerably throughout the state.
As pointed out by the Florida Department of Revenue, in order to protect homeowners against significant volatility in property values, the Florida Save Our Homes law caps the annual increase in the assessed value of homes at 3% a year or the Consumer Price Index, whichever is lower. If the market value declines, your assessed value is increased by the lower of 3% or the Consumer Price Index until the assessed value is the same as the market, or just value.
Florida residents can claim a $25,000 homestead exemption on their principal residence. In certain counties and cities of Florida there is an additional homestead exemption of up to $25,000, for a total potential exemption of up to $50,000, for persons 65 and older whose household income does not exceed a certain level. According to the Retirement Living Center, these limits were $26,763 for single taxpayers or $30,046 for couples in 2007 and are adjusted each year based on the cost of living index. In many cases, household income for purposes of these limits excludes social security income. This additional homestead exemption applies to property taxes levied by the county or city, and not taxes for school districts or other taxing authorities. You can find a table showing the counties and municipalities that offer this additional exemption on the Florida Department of Revenue website.
There is an additional $500 exemption for widows and widowers, $500 for a Florida resident who is totally and permanently disabled or blind, and a $5,000 exemption for an ex-service member who is disabled at least 10% in war or by service-connected misfortune. A veteran with service-connected total and permanent disability can qualify for total exemption from property tax on a homestead.
Your property tax is calculated according to the following formula: Just Value (market value) – accumulated Assessment Limitations (Save Our Homes) = Assessed Value. Assessed Value – Applicable Exemptions (e.g., homestead) = Taxable Value. Taxable Value x Milling Rate = Total Tax.
For example, if your principal home has a market value of $250,000, you have accumulated Save Our Homes protections of $30,000, you qualify for the homestead exemption and an additional homestead exemption of $25,000 because you are 65 or older, and the milling rate in your location is 20 mills, your tax would be calculated as: $250,000 – $30,000 = $220,000 – $25,000 – $25,000 = $170,000 x 0.02 = $3,400 a year.
Florida sales tax
The state sales tax in Florida is 6%, which is relatively high compared to other states. Additional county sales taxes can push the combined rate up to 9.5%. Food, prescription and non-prescription drugs are exempt from the state sales tax. The sales tax on vehicles and mobile homes is at the rate that applies in the county where the vehicle or mobile home will be registered.
Estate and inheritance tax
There is no inheritance tax or estate tax in Florida, but the personal representative may need to complete and file an affidavit to remove Florida’s automatic estate tax lien if the decedent owned real property in Florida.
Gasoline and motor fuels tax
In Florida, the state fuel excise tax on gasoline is $0.326 per gallon and $0.285 per gallon on diesel. Local taxes on gasoline range from $0.055 to $0.17 cents per gallon, and there is a 2.07% gasoline pollution tax.
America’ best places to retire – Florida Retirement: www.americas-best-places-to-retire.com
Bankrate – State Tax Roundup – Florida: www.bankrate.com
Florida Department of Revenue – Property Tax Exemptions: http://dor.myflorida.com
Retirement Living Information Center – Taxes by State: www.retirementliving.com
Tax Foundation – Florida’s State and Local Tax Burden, 1977-2008: www.taxfoundation.org
Top Retirements – Guide to Florida Retirement Towns: www.topretirements.com