Florida Has No State Income Tax

Florida is one of nine states with no individual income tax. The state constitution actually prohibits it — Article VII, Section 5 of the Florida Constitution bans a personal income tax unless approved by a supermajority of voters. That means no tax on wages, no tax on interest and dividends, no tax on business income, and no tax on capital gains.

For someone selling $2 million worth of stock, the difference between living in Florida and living in New York is about $250,000 in state and city taxes alone. That’s not a rounding error. It’s a house.

This is the main reason high-income earners and retirees relocate to Florida (and to a lesser extent, Texas, Nevada, and Wyoming). The savings on a single large capital gain event can pay for the move many times over.

Federal Capital Gains Still Apply

Living in Florida doesn’t change your federal tax obligation. When you sell an asset you’ve held for more than one year, the gain is taxed at federal long-term capital gains rates under IRC Section 1(h):

• 0% on taxable income up to $47,025 (single) or $94,050 (MFJ) for 2024
• 15% on taxable income from $47,026 to $518,900 (single) or $94,051 to $583,750 (MFJ)
• 20% on taxable income above those thresholds

Short-term capital gains (assets held one year or less) are taxed as ordinary income — at your regular federal income tax rate, which goes up to 37%. The IRS publishes the current brackets in Publication 17 and the annual inflation adjustments.

On top of the federal rate, high-income taxpayers owe the 3.8% net investment income tax (NIIT) under IRC Section 1411 if their modified adjusted gross income exceeds $200,000 (single) or $250,000 (married filing jointly). So a Florida resident in the top bracket pays 20% + 3.8% = 23.8% on long-term capital gains. That’s lower than what someone in New York or California pays, but it’s not zero.

Establishing Florida Domicile Properly

If you’re moving to Florida from a high-tax state, simply buying property there isn’t enough. Your former state — especially New York and California — will try to prove you’re still a resident for tax purposes. Both states are aggressive about residency audits, particularly for high-income taxpayers with large capital gains.

To establish Florida domicile convincingly, you should:

• Get a Florida driver’s license and surrender your old state’s license
• Register to vote in Florida
• File a Declaration of Domicile with your Florida county’s clerk of court under Florida Statute 222.17
• Claim Florida homestead exemption on your primary residence under Article VII, Section 6 of the Florida Constitution
• Move your professional and financial ties — bank accounts, brokerage accounts, attorney, CPA, doctors
• Update your address with the IRS, Social Security Administration, passport office, insurance companies, and financial institutions
• Spend more than 183 days in Florida — most states use a day-count test as one factor in residency determinations

The more ties you sever with your former state and establish in Florida, the stronger your domicile claim. New York’s residency audit looks at five factors: domicile, maintaining a permanent place of abode, days spent in-state, where your “near and dear” items are, and your business affiliations. Failing even one factor can keep you on the hook for NY taxes.

We’ve seen clients who moved to Florida, sold stock worth millions, and then got audited by New York two years later. If they kept their Manhattan apartment, their kids’ schools were still in NY, and their CPA was still in Midtown — New York is going to argue they never really left.

Selling Assets After Moving: The Source State Problem

Here’s a trap that catches people. You move from New York to Florida in March, then sell a business or a large stock position in September. You think you’re a Florida resident, so no state tax. But your former state may disagree.

New York, for example, taxes part-year residents on income earned or accrued during the period of residency under NY Tax Law Section 601. If you were a New York resident for the first three months of the year, income allocated to that period is taxable to NY. Capital gains on stock are generally allocated to your state of domicile on the date of sale — so if you’ve established Florida domicile before selling, NY shouldn’t tax the gain.

But some income is sourced to a state regardless of where you live. If you sell a business that operates in New York, New York taxes the gain as New York-source income, even if you’re a Florida resident. Partnership interests where the partnership operates in NY, rental property located in NY, and S-corp income from NY-based businesses all follow the same rule.

California is even more aggressive. California’s Franchise Tax Board sometimes argues that gain on the sale of a business is California-source income if the business had California customers or operations, even if the seller lives in Florida. These disputes can end up in court.

The timing and structure of your move matter enormously. If you’re planning a large sale, talk to a tax advisor before you execute the transaction — ideally before you even start the domicile change.

Florida’s Homestead Exemption and Property Tax

Florida doesn’t have income tax, but it does have property tax. The average effective property tax rate across Florida is about 0.86%, which is close to the national average. Property tax is levied by counties and municipalities, so rates vary.

The homestead exemption is one of the strongest in the country. If your primary residence is in Florida, you can exempt up to $50,000 of assessed value from property tax ($25,000 from all taxes, plus an additional $25,000 from non-school taxes for assessments over $50,000). You must apply by March 1 of the year you want the exemption.

Florida also has the Save Our Homes cap under Article VII, Section 4 of the Florida Constitution, which limits assessed value increases to 3% per year (or CPI, whichever is less) on homesteaded property. If your home’s market value jumps 15% in a hot market, your taxable assessed value only goes up 3%. Over time, this creates a significant gap between market value and assessed value. It’s one reason long-time Florida homeowners pay dramatically less in property tax than new buyers of comparable homes.

The portability provision lets you transfer up to $500,000 of the difference between your assessed and market value to a new homesteaded property within Florida. So if you’ve built up a large Save Our Homes benefit, you don’t lose it entirely when you move within the state.

Documentary Stamp Tax on Real Estate Transfers

When you sell real estate in Florida, the buyer pays documentary stamp tax on the deed at a rate of $0.70 per $100 of consideration (or $7 per $1,000) under Florida Statute Chapter 201. In Miami-Dade County, the rate is $0.60 per $100 for single-family residences. There’s also a surtax on documents in certain counties.

On a $600,000 home sale, that’s about $4,200 in documentary stamp tax. It’s not a capital gains tax, but it’s a transfer cost that eats into your proceeds. Florida also has an intangible tax on mortgages ($2 per $1,000 of new mortgage debt), though the state’s old intangible personal property tax on stocks and bonds was abolished in 2007.

Compared to other states’ real estate transfer taxes, Florida’s is moderate. New York’s combined state and city transfer taxes on a $2 million Manhattan apartment run close to $60,000. So even with documentary stamp tax, Florida is cheaper for real estate transactions.

How Florida Compares to High-Tax States

The tax savings from Florida residency are most dramatic when compared to the states people typically leave:

• New York: Top state rate of 10.9%, plus NYC rate of up to 3.876%. A $1M capital gain costs about $148,000 in state and city taxes. In Florida: $0.
• California: Top state rate of 13.3%, with no preferential rate for capital gains. A $1M gain costs $133,000 in state tax. In Florida: $0. See our California capital gains guide for more detail.
• New Jersey: Top rate of 10.75%. A $1M gain costs about $107,500. In Florida: $0.
• Connecticut: Top rate of 6.99%. A $1M gain costs about $69,900. In Florida: $0.

For someone with $5 million in unrealized gains, the difference between selling as a New York resident versus a Florida resident is roughly $740,000 in state and city taxes. That number alone explains the migration patterns you see in IRS migration data.

What Florida Does Have: Sales Tax and Other Costs

Florida doesn’t tax income, but it isn’t a zero-tax state. The revenue has to come from somewhere, and in Florida it comes from:

• Sales tax: 6% state rate under Florida Statute Chapter 212, plus county surtaxes of 0.5% to 2.5%. The combined rate in most Florida counties is between 6.5% and 8%. Groceries are exempt, but most other goods and many services are taxable.
• Property tax: Varies by county. Miami-Dade, Broward, and Palm Beach counties run roughly 1.0% to 1.2% effective rate before homestead exemption.
• Insurance costs: Florida’s homeowners insurance market is one of the most expensive in the country. Premiums of $5,000 to $15,000+ per year are common, depending on location, home value, and wind exposure. This isn’t a tax, but it’s a cost that offsets some of the income tax savings.
• No state estate tax: Florida repealed its estate tax in 2004 and has no plans to reinstate it. For high-net-worth individuals, this is another major advantage over states like New York (which has its own estate tax with a $6.94M exemption and a cliff). See our estate tax exemption for 2026 guide.

The lack of a state estate tax is underrated. A New York resident with a $15 million estate faces both federal estate tax and New York estate tax. A Florida resident with the same estate only faces federal. That’s a difference of hundreds of thousands of dollars at death.

The Home Sale Exclusion Works the Same in Florida

If you sell your primary residence in Florida, the federal Section 121 exclusion applies just like anywhere else: up to $250,000 of gain excluded for single filers, $500,000 for married filing jointly. You need to have owned and used the home as your primary residence for at least two of the last five years.

Since Florida has no state income tax, the gain above the exclusion is only subject to federal capital gains tax (and NIIT if applicable). In a state like California, that excess gain would face both federal and state taxes. A Florida homeowner selling a home with a $900,000 gain pays federal tax on $400,000 (after the $500K MFJ exclusion). A California homeowner selling the same home pays federal plus $53,200 in state tax on that $400,000.

Sources & References

• Florida Constitution, Article VII, Section 5 — Income Tax Prohibition
• Florida Statute 222.17 — Declaration of Domicile
• Florida Department of Revenue — Property Tax Exemptions
• Florida Statute Chapter 201 — Documentary Stamp Tax
• Florida Statute Chapter 212 — Sales Tax
• 26 U.S.C. § 1 — Tax Imposed (Capital Gains Rates)
• 26 U.S.C. § 1411 — Net Investment Income Tax
• 26 U.S.C. § 121 — Exclusion of Gain from Sale of Principal Residence
• IRS — SOI Tax Stats Migration Data
• New York State — Nonresident Audit Information
• IRS — Tax Inflation Adjustments for 2024