If you live in the United States, you are required to pay taxes. However, tax laws and regulations vary from state to state, so it is imperative you understand them in the state you reside in. The Florida Department of Revenue does require its individual citizens and businesses to pay various types of taxes. Revenue from these taxes is used to fund the government and public institutions.
Basic Florida Department of Revenue Tax Requirements
If you are wondering what states have no income tax, you should know that Florida is one of those states. Individual citizens of Florida are not required to pay any income tax. However, there are other types of taxes individuals and businesses are required to pay, such as sales and use tax, corporate income tax, and intangible tax.
- Florida State Tax: There is no state income tax.
- Florida Sales Tax: The sales tax rate is 6 percent.
- Florida Property Tax: Florida property taxes are calculated according to the market value of properties as of January 1st of the current year.
- Florida Corporate Income Tax: All corporations that earn income in Florida are required to file an income tax return unless they are exempt.
For years, Florida tax rates have been some of the lowest in the country by many standards. Although Floridians are not required to pay certain taxes, the state still collects taxes in a variety of ways. Here is an explanation of some of the taxes in Florida.
Taxes in Florida
Income Tax
Florida’s relatively low tax burden is driven by the fact that the state does not require citizens to pay any income tax. This income tax ban is supported by the state constitution. Floridians do, however, have to pay federal income taxes.
Intangibles Tax
As of the early 2000s, Floridians are no longer required to pay taxes on intangible goods, such as investments.
Estate Tax
There is no estate or inheritance tax in Florida. No amount willed to an individual goes to the state.
Sales Tax
The state of Florida charges a 6 percent tax on the rental or sale of goods, with the exception of certain goods, such as medicine and groceries. Counties also have the right to levy local taxes in addition to the state amount. Most counties engage in this practice, and there are some counties with sales tax rates as high as 7.5 percent.
Use Tax
There is a tax on out-of-state purchases and the internet, even if no tax was added at the time of purchase. Floridians still need to pay the use tax if they were charged a lower tax rate in a state outside of Florida, even if the items purchased were delivered. Citizens must report such sales and personally pay the tax on them.
Property Tax
The state itself does not charge property taxes, but local governments do. Local governments are largely funded using property taxes, and even though Florida is known for its low tax rates, property taxes in the state are some of the highest in the nation. Property tax rates are assessed locally and vary from county to county, and they are based on property values. There are, however, certain exemptions to lighten the tax burden on some citizens, businesses, and organizations.
Tax Exemptions
Widow (er) Exemptions up to $500 are available to widowers and widows who have not remarried. Citizens do not qualify for this exemption if they were divorced at the time of their spouse’s death.
Homestead Exemptions on primary residences in Florida may be available in amounts up to $50,000. Although the maximum amount is $50,000, only $25,000 can be applied to all taxes. The remaining amount will only apply to non-school taxes.
Blind Person Exemptions up to $500 are available to Floridians who are classified as legally blind.
Senior Citizen Exemptions are only available in certain cities and counties. Residents aged 65 and older who earn less than $20,000 (this amount has been recently adjusted for inflation) may be eligible for an exemption of up to $50,000. Senior citizens may qualify for this exemption in addition to the Homestead Exemption.
There are numerous Veteran Exemptions in Florida.
- Honorably discharged veterans who are permanently or totally disabled and those who require wheelchairs due to their service are exempt from all property taxes. In some cases, this benefit can be transferred to surviving spouses.
- Veterans who are disabled by 10% or more in war or military-related events are eligible for an exemption of up to $5,000 on any property they own.
- Members of the military who were deployed within the last calendar year are eligible for exemptions based on the amount of time they spent deployed.
- Honorably discharged disabled veterans 65 and older who resided in Florida at the time of their military service may qualify for an additional exemption. They must be permanently disabled as a result of their service. A discount on their property taxes will be calculated based on the percentage of their disability.
Total and Permanent Disability Exemptions are available for property owners suffering from a total or permanent disability. Quadriplegics who use their property for homestead purposes do not have to pay any property taxes. Those who require a wheelchair for mobility or are classified as legally blind and have a gross income below $14,500 in 1991 dollars (adjusted for inflation) do not have to pay property taxes as well.
Additional Taxes
Citizens must pay taxes in Florida on a variety of other goods and services. A Documentary Stamp Tax must be paid on documents that transfer interest in Florida real property, such as quit claim deeds and warranty deeds. Taxes must also be paid on tobacco products, communications services, fuels, and more.
Corporate Income Tax
Although private citizens do not have to pay income taxes, businesses of various types do. Artificial entities and corporations that earn income or conduct business in the state, including out-of-state corporations, are required to file an income day tax return (unless they qualify for an exemption). An income tax return must be filed even if a corporation does not owe any taxes.
Individuals, sole proprietorships, testamentary trusts, and estates of decedents are exempt and not required to file a tax return. S Corporations are typically exempt as well unless they owe federal income tax. The Corporate Income Tax rate in Florida is 5.5 percent.
Reemployment Tax (Unemployment Tax Formerly)
Eligible companies are required to pay a Reemployment Tax. Formerly referred to as the Unemployment Tax prior to 2012, the tax provides temporary, partial income to employees who lose their jobs through no fault of their own and are capable of working.
Taxes on Nonprofit Organizations
Nonprofit organizations are often exempt from certain taxes in Florida. Since each tax is distinct and separate with its own requirements, being exempt from one type of tax does not necessarily mean an organization will be exempt from all taxes. Not all tax exemptions in the state require organizations to obtain a federal tax-exempt status.
Organizations that are tax-exempt and have “unrelated trade or business income” for federal tax purposes will need to pay income tax in Florida. They must file either a Corporate Income/Franchise tax return or the Florida Corporate Short Form Income Tax Return. Any tax-exempt organization or nonprofit, including private foundations, is exempt from Federal Income Tax. They are only required to file a Florida Corporate Income/Franchise Tax Return if:
- the organization files Form 990T with the IRS or
- has “unrelated trade or business taxable income” according to I.R.C. s. 512
You’re Not Alone
If you reside in Florida and owe a significant amount to the IRS, Tax Relief Systems may be able to help you. We can interact with the IRS on your behalf, and work to reduce your tax burden to an acceptable level. Don’t fight the Department of Revenue alone. Contact Tax Relief Systems to get started today.
