- - 8 Must-Know Florida Tax Rules if You Dream of Retiring in the Sunshine State

Michelle SmithJanuary 7, 2026 at 8:10 AM

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If you're a Florida resident, you probably have plenty to love about the state, from its climate and beaches to its theme parks and top-notch cuisine. But there might be a few unique aspects of Florida life you find less exciting, starting with its state taxes.

Are Florida's taxes more or less than those in other states? If you live in Florida, are you getting a good return on your state tax investment so you can get ahead financially? We answer these questions and more in our guide to Florida's state taxes.

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1. State income taxes

As of 2025 and 2026, Florida remains one of the handful of states that do not levy a personal state income tax on wages, retirement income, or investment income. Depending on how you count them, eight or nine states have no general income tax. Florida is unique among them in that it also does not tax capital gains or investment income of residents at the state level.

Washington doesn't tax wages but does tax capital gains above a threshold for high earners, whereas Florida does not tax any form of personal income, including capital gains.

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2. Property taxes

Out of all 50 states and Washington, D.C., Florida's effective property tax rate is relatively low — roughly 0.79%–0.83% of a home's value — compared with states like Hawaii (about 0.27%, the lowest) and New Jersey (about 2.23%, among the highest).

In Florida, the median home price was $405,500 as of November 2025, according to Redfin. The average annual property tax is approximately $2,386.

3. Capital gains taxes

Florida doesn't tax capital gains. No matter how much you earn on investments and interest this year, you won't lose any part of it to state taxes.

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4. Estate taxes

Like most other states, Florida doesn't impose an estate tax. You can leave an inheritance to your kids without worrying they'll have to give up a portion of the estate to the state of Florida.

5. Fuel taxes

Florida's fuel taxes are slightly above the national average. The average combined federal and state gasoline tax nationwide is about 51 cents per gallon. In Florida, drivers pay about 39.4 cents per gallon in state fuel taxes, which brings the total tax to roughly 57.8 cents per gallon when the 18.4-cent federal gas tax is included.

6. Social Security taxes

Seniors in Florida avoid throwing away money on Social Security taxes. Most states don't tax your Social Security earnings, and, you guessed it, Florida is among them. Even though the state has a large population of seniors, it doesn't take a cut of their Social Security benefits.

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7. Sales taxes

Florida imposes a flat sales tax rate of 6% on nearly all goods and services in the state. A handful of products have a lower tax rate, including amusement machine receipts (4%) and commercial property renting, leasing, or licensing (2%). Electricity is the only commodity taxed at the slightly higher rate of 6.95%.

Finally, two items don't incur sales taxes at all when purchased in Florida: the American flag and the Florida state flag.

8. How to file taxes in Florida

There's more good tax news for Florida residents: Since you aren't taxed by the state, you don't have to file any tax paperwork with the state. The Florida state website does provide a link to the government's tax e-filing site if you need to file taxes in any other state.

Do you get what you pay for in Florida?

It's time for the moment of truth. Do Florida taxpayers get a solid return on their investment, or does their tax burden fail to yield many positive results?

Thanks largely to Florida's nonexistent income tax, the state ranks high in the nation in terms of securing a solid return on tax dollars. While the minimal state taxes mean Florida doesn't have the resources to offer many government services, its low tax burden ensures state taxpayers have a little extra money in their pockets come tax season.

With rock-solid infrastructure and fewer taxes than most anywhere else in the nation, it's easy to see why Florida is a top spot to retire.

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Bottom line

Sunshine isn't the only thing that makes Florida a popular destination. You'll be able to keep more cash in your wallet by avoiding state income taxes, capital gains taxes, and Social Security taxes. This can make for a comfortable living situation, as long as you keep overall living costs in check.

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Source: “AOL Money”