Florida doesn’t tax Social Security, but there are other Florida taxes you should be aware of. Don’t forget that IRS also might tax your Social Security.
Does Florida tax retirement income?
Florida doesn’t tax Social Security or retirement income. In Florida, no income tax really means no income tax. It’s not like other states where earned income doesn’t get taxed but investment income does get taxed.
Florida never requires individuals to file income tax returns or report income for tax purposes.
Don’t forget that if you’re a snowbird, you may still owe income taxes to your old state. It will depend on where you live most of the year and the other state’s part-year resident rules.
What other taxes do Florida seniors have to pay?
Florida has two primary taxes that drive most of its revenue — sales tax and property tax.
Florida sales tax is usually between 6% to 8% depending on the county you live in. Sales tax applies to almost all purchases except groceries. Things you might not pay sales tax on in other states, such as clothing, are usually taxed.
Florida also has relatively high property taxes especially when considering rapidly rising home values. Additionally, Florida has very few property tax benefits for seniors.
The main property tax break for Florida residents is the Homestead Exemption. The Homestead exemption limits your property tax increases over time.
So the longer you’ve been in your house, the lower your property tax will be. Unlike other states, there are no age requirements for the Homestead Exemption. If you just moved to Florida, your property taxes will be much higher than a younger but long-time Florida homeowner.
A small number of Florida counties offer small property tax reductions for seniors over age 65. These reductions usually only apply to $25,000 to $50,000 of your home’s value and only add up to a few hundred dollars in tax savings.
Florida Cost of Living
Don’t forget to consider your total cost of living and not just taxes. Florida is rapidly becoming one of the highest cost-of-living areas in the country.
In addition to rising property values pushing up rent or property taxes, Florida’s insurance market is an absolute mess.
Home insurance on a relatively modest home can start at between $500 to $1,000 per month. In addition, due to roof claim fraud, many insurance companies are declining coverage on homes that have roofs over ten years old instead of the usual 20 to 25.
Florida car insurance is also very high. Many new Florida residents report seeing their rates double after moving to Florida.
And unless you’re moving to a community for seniors that has its own transportation, it’s almost impossible to get around in Florida without a car.
The IRS might tax your Social Security.
Even if Florida doesn’t tax your Social Security, don’t forget that the IRS might.
If you make at least $25,000 as a single filer or $34,000 as a joint filer, 50% of your Social Security benefits might be subject to income tax. If your income is over $34,000 as a single filer or $44,000 as a joint filer, 85% of your Social Security benefits may be taxable.
Income means total income not just Social Security. So having a pension, IRA withdrawals, 401(k) withdrawals, or investment income could make your Social Security taxable.