Here are four big benefits to being a
Florida Resident:
1. No State Income Tax
Florida is one of only seven states
with no income tax and is the only “no tax” state well suited for retirees. Since
Florida’s prohibition against state income tax is included in the State
Constitution, it would take a (highly unlikely) constitutional amendment to
change it. Florida’s Constitution also prohibits municipalities and counties
from levying any personal income tax.
2. No State Death Tax or Estate Tax
Florida’s Constitution bans separately
imposing estate or inheritance tax of the kind present in many other states. Known
as the Economic Growth and Tax Relief Reconciliation Act of 2001, the
legislation made significant changes to the federal estate tax, greatly
increasing the federal tax exemption. This change has been beneficial to
individual taxpayers, but it has been very bad for the states themselves. Until
2005, states shared in the revenue generated by the federal estate tax,
receiving an amount equal to what is known as the “State Death Tax Credit.”
Some states are making up for the
lost revenue by enacting their own separate estate tax – a phenomenon known as
“decoupling.” Among those that have decoupled from the federal estate tax
exemption are Maryland, Virginia, and the District of Columbia. In Florida,
residents are protected from that threat.
3. Florida’s Homestead Law
The State of Florida’s Homestead Law
protects the Florida resident from losing his or her home to a creditor or any
other lien holder, except for mortgages. Furthermore, this protection is found
in the state Constitution, which requires a supermajority to amend. While no
one plans to retire and subsequently have to file for bankruptcy, it provides
great peace of mind knowing that should this occur, your home is safe.
4. Florida’s “Save Our Home Act”
This act provides for a homestead
exemption on a Floridian’s primary residence. Once qualified, the assessed
value of the property for tax purposes carries an exemption for the first
$50,000 of taxable value for all taxing entities except the school district
(which allows a $25,000 exemption). Also, once the property is qualified for
the homestead exemption, the assessed value for tax purposes cannot rise more
than 3% in any given year. Thus, over long periods of time, a property’s market
value will increase more than its assessed value, resulting in equity which you
do not pay tax on.
