How Floridians Save Thousands of Dollars Each Year

The beautiful beaches, international travelers, vibrant communities, and delicious food are things we all love about Miami. With 58% of incoming Miami residents being from other states, there’s something for everyone. Although all of these aspects make Miami the special city that it is, most incoming residents are drawn to the cut in taxes that Florida offers. With no state income tax and no estate tax, incoming residents could take advantage of thousands of more dollars in their bank accounts. With these savings on state income tax, mortgage payments and the purchase of a property could actually be free to Florida taxpayers as the cost of savings could be more than the value of the home. 

Recent Policy Changes

The Tax Cuts and Jobs Act (TCJA) passed in 2017 has done no service to people inside the high-taxed realm. Before the TCJA many benefited from the state and local tax deductions on federal income tax forms. However, after this passed, TCJA limited these deductions to $10,000 per year. Individuals filing taxes in high-tax states now are revoked significant dollars worth of tax deductions, leaving many looking to relocate and file taxes in states that offer tax breaks, specifically Florida. 

Breaks for Businesses

Florida is also becoming increasingly popular as a business headquarters location, both for mega companies and startups. The state offers several incentives and tax breaks for businesses that decide to put their roots here. The Florida government estimates that these tax breaks and incentives are saving local taxpayers around $168 million annually. These incentives and tax breaks are applied to:

• Property tax on business inventories or goods-in-transit
• Corporate franchise tax on capital stock
• Sales tax on the procurement of raw materials
• Corporate income tax on limited partnerships 
• Insurance premium tax advantages

Real Estate Taxes

Property and estate taxes are the final financial incentives for relocators. The state of Florida does not have a tax on inheritance, also known as the “death tax”. Lastly, Florida has a tax exemption on the first $50,000 of a homeowner’s property. This is only accessible if the resident declares the new home as their primary residence. 

Luxury Market Impacts 

With many financial incentives, the luxury real estate market is booming, seeing as Florida performed better in this segment than most other states across the country. When looking at the national luxury market, the average price has seen an increase of 22% from 2020 to 2021 at $1.7 million. However, in Miami-Dade County, this number increases substantially to an average price increase of  42.1% and an average price of $2.3 million. A majority of this increase is seen in homes rather than condominiums or apartments, as the pandemic left many yearning for more space while at home. 

What are the state income tax savings in Florida?

*Individual state income taxes by a married couple filing jointly on various incomes

Sources: Wall Street Journal, European Business Review