Florida taxes are complex, just as they are in any other state. The real estate taxes that you pay on a home can vary widely depending on what city and what county you are buying the home in.However, in this article, we take a look at how residents of the Sunshine State are affected by income tax, sales tax, property tax, intangible tax and other government levies.
Why the difference in Florida Real Estate taxes? There are several factors which affect the size of your property tax bill, but the main thing is that the taxes will usually be higher in areas that are experiencing rapid population and housing growth. When rapid growth happens some local governments cannot provide the level of services expected of them without raising taxes. This usually happens because city governments didn’t anticipate the rapid growth and must then play catch-up. Had they foreseen the growth, it might be a different story. They could have used the expanding tax base from more people moving into the area to increase the amount and level of services that would be needed such as building new roads and infrastructure, providing adequate schools, police, medical, and fire services, and hiring more public servants to oversee and run them.
The strength of Florida’s low tax burden comes from its lack of an income tax, making them one of seven such states in the U.S. The state constitution prohibits such a tax, though Floridians still have to pay federal income taxes.
Florida law mandates a minimum sales tax rate of 6%, collected by the state government to provide services to all Floridians. However, the law also provides for a local option sales tax that lets each county set its own local tax that is collected on top of the general state rate. This means that you’ll pay a different sales tax rate in each Florida county. For the current rates in each county in the state.
IThough the state government does not collect any property taxes, local governments receive much of their funding through these taxes. These rates are assessed at the local level and can vary by county, and they are based on the value of the property. Property taxes in Florida are some of the highest in the country, although there are several exemptions to try to lighten the load on some Floridians.
Florida’s Intangible Tax
At one time, Florida assessed an annual intangible tax on investment assets held by individuals. This tax was repealed in 2007.
Property Tax Exemptions
• Homestead Exemptions of up to $50,000 are available to Florida residents on their primary residence. The first $25,000 of this exemption applies to all property taxes. The second $25,000, which applies to asses values between $50,000 and $75,000, applies to non-school taxes only.
- Widow(er)’s Exemptions of $500 are available to non-remarried widows and widowers.
- Senior Citizen’s Exemptions of up to $50,000 are available in certain counties and cities to citizens aged 65 and older who have gross income below $20,000 (in 2001 dollars, adjusted for inflation).
Additional exemptions are available for citizens who have various types of disability, ranging from a $500 exemption to complete relief from property taxes. These exemptions include:
• Disability Exemptions of $500 are available to Florida residents who are totally and permanently disabled.
- Blindness Exemptions of $500 are available to legally blind residents.
- Quadriplegic Exemptions are available on real estate owned and used as a homestead by a quadriplegic. Such homesteads are completely exempt from property tax.
- Total Disability Exemptions are available to real estate owned and used as a homestead by a totally and permanently disabled person who must use a wheelchair for mobility or is legally blind and has gross income below $14,500 (in 1991 dollars, adjusted for inflation). This exemption provides complete relief from property taxes
- Veteran’s Exemptions exist in a number of different forms.
- A veteran documented as disabled by 10% or more in war or service-connected events can earn an additional exemption of $5,000 on any owned property.
- An honorably discharged veteran who is totally and permanently disabled or requires a wheelchair for mobility due to their service can be exempt from all property taxes. In some circumstances, this benefit can be transferred to a surviving spouse.
- An honorably discharged and disabled veteran who is 65 or older who was a Florida resident when they entered military service may be eligible for an additional exemption. The disability must be permanent and must have been acquired as a result of the military service. The property tax will be discounted based on the percent of the disability.
- Members of the military deployed during the last calendar year can receive exemptions based on the percent of time during the year they were deployed.
Corporate Income Tax While individuals do not have to pay income taxes, the same is not true for all types of businesses in Florida. Corporations and artificial entities that conduct business, or earn or receive income in Florida, including out-of-state corporations, must file a Florida corporate income tax return unless exempt. They must file a return even if no tax is due. Sole proprietorships, individuals, estates of decedents, and testamentary trusts are exempted and do not have to file a return. S Corporations are usually exempt as well, unless federal income tax is owed. The Florida Corporate Income Tax rate is 5.5%.
Reemployment Tax (formerly Unemployment Tax) Eligible businesses must also pay the Reemployment Tax. Formerly called the Unemployment Tax before being renamed in 2012, this tax is used to give partial, temporary income to workers who lose their jobs through no fault of their own, and who are able and available to work.