Tax Information for Florida Residents and Businesses

 

The State of Florida does NOT have Personal Income Taxes, Inheritance, Gift, or Intangible Taxes!

 

How is Florida Residency Determined?

You are considered a Florida resident when your true, fixed, and permanent home and principal establishment is in Florida. Filing a declaration of domicile, qualifying for homestead exemption, or registering to vote in Florida can establish residency. Other actions, such as obtaining a Florida driver’s license, only indicate an intent to establish residency.

Types of Taxes

Ad Valorem (Property) Tax

If you purchase a home in Florida, you will pay ad valorem or “property” tax based on the taxable value of the property. Ad valorem taxes are assessed by the county property appraiser and collected annually by the county tax collector’s office.

If you own your home, reside there permanently and are a Florida resident all as of January 1, you may qualify for Homestead exemption. Homestead can reduce your taxable value on your home as much as $50,000, saving you approximately $750, annually. More importantly, your assessed value, which is used to calculate your property taxes, can not increase more than 3% annually after you are granted the exemption.

Certain exemptions are also available to disabled persons, military/veterans, deployed military, widows/widowers, limited income seniors, and certain organizations such as charitable, religious, and educational. Call your Florida County Property Appraiser for more details.

Sales and Use Tax

Sales Tax - Florida’s general sales tax rate is 6 percent. Each retail sale, admission charge, storage, use, or rental is taxable, along with some services. Some items are specifically exempt. Some counties impose a discretionary sales surtax in addition to the 6 percent state tax. The county tax rates can range from .25 to 2.5 percent, and are levied on the first $5,000 of the purchase price. The $5,000 limit does not apply to commercial rentals, transient rentals, or services. Consumers pay sales tax and any county-imposed taxes to the seller at the time of purchase.

Use Tax - Unless specifically exempt, merchandise purchased out of state is subject to tax when brought into Florida within 6 months of the purchase date. This “use tax,” as it is commonly called, is also assessed at the rate of 6 percent. Examples of such taxable purchases include purchases made by mail order or the Internet, furniture delivered from dealers located in another state, and computer equipment delivered by common carrier. Items purchased and used in another state for 6 months or longer are not subject to use tax when the items are later brought into Florida.

No use tax is due if the out-of-state dealer charged sales tax of 6 percent or more. If the dealer charged less than 6 percent, you must pay the difference to equal 6 percent. For example, if the dealer charged 5 percent, you must pay the additional 1 percent to Florida. An Out-of-State Purchase Return must be used to file and pay use tax. If the tax owed is less than $1.00, you do not have to file.

Here are some examples of business activities, product uses, and consumptions requiring the collection of sales tax or the payment of use tax:

  • Sales of taxable items at retail

  • Repairs or alterations of tangible personal property

  • Rental or lease of real property (for example, commercial office space, mini-warehouses, or short-term living accommodations)

  • Charges for admission to any place of amusement, sport, or recreation

  • Operating private membership clubs that provide recreational or physical fitness facilities

  • Manufacturing or producing goods for sale at retail

  • Importing goods from any state or foreign country, for sale at retail or for use in the business

  • Selling service warranty contracts

  • Ordering and using, on a regular basis, mail-order products on which no sales tax was charged

  • Operating vending or amusement machines

  • Providing taxable services (for example, investigative and crime protection services, interior nonresidential cleaning services, and nonresidential pest control services)

Motor Vehicle Taxes

Florida’s 6 percent use tax applies to and is due on motor vehicles brought into this state within 6 months from the date of purchase. If the purchaser resides in a county that imposes a discretionary sales surtax, that tax will also apply. Use tax and discretionary sales surtax do not apply if a like tax equal to or greater than 6 percent has been lawfully imposed and paid to another state or District of Columbia.

It is presumed that a motor vehicle used in another state, territory of the United States, or District of Columbia for 6 months or longer before being brought into Florida was not purchased for use in Florida. To qualify for exemption from use tax, you must provide documents to prove that the vehicle was used outside Florida for 6 months or longer.

The full amount of use tax (6 percent) and applicable discretionary sales surtax are due on any motor vehicle imported from a foreign country into Florida. It does not matter if the motor vehicle was used in another country for a period of 6 months or more prior to the time it is brought into Florida. Furthermore, Florida does not recognize tax paid to another country when calculating the tax due. The tax is calculated on the value of the vehicle at the time it is brought into Florida, not on the original purchase price.

Documentary Stamp Tax

Will You Purchase a Home or Business Property, Apply for a Mortgage or Loan, or Purchase Bonds?

Documentary stamp tax is levied on documents that transfer interest in Florida real property, such as warranty deeds and quit claim deeds. This tax is typically paid to the Clerk of Court at the time the document is recorded.

Documentary stamp tax is also levied on notes, certain renewal notes, bonds, and other written obligations to pay money executed, signed or delivered in Florida and mortgages and other liens filed or recorded in Florida. The tax is paid to the Clerk of Court if the document is recorded, or sent directly to the Department of Revenue, if not recorded.

Other Taxes and Fees for Florida Residents

There are other taxes and fees that, in certain counties or circumstances, Florida residents may be required to pay, such as: convention development tax, local option tourist tax, lead-acid battery fee, new tire fee, motor vehicle fee (Lemon Law), or rental car surcharge.

Operating a Business in Florida?

Most businesses are subject to sales and use tax, discretionary sales surtax, reemployment tax, and corporate income tax. If your business is required to collect sales tax, you must register as a sales and use tax dealer before you begin conducting business in Florida!

Reemployment Tax (formerly Unemployment Tax)

Who Pays Reemployment Tax? - Florida employers pay for reemployment assistance through a tax managed by the Florida Department of Revenue. It is one of the employer's business costs. Workers do not pay reemployment tax and employers must not make payroll deductions for this purpose. Employer payments go into a fund from which money is paid to eligible, unemployed Floridians who file claims for reemployment assistance. After a qualifying period, employers with a stable employment history receive a lowered tax rate.

Who is Liable? - A new business is required to report its initial employment in the month following the calendar quarter in which employment begins. An "Application to Collect and/or Report Tax in Florida" must be completed to determine if the employer is liable for the tax as provided by law.

An employer may establish liability if it meets any of the following conditions:

  • It has a quarterly payroll of $1,500 or more in a calendar year. It has one or more employees for a day (or portion of a day) during any 20 weeks in a calendar year.

  • It is an agricultural employer and has five or more workers for a day (or portion of a day) during any 20 weeks in a calendar year, or a $10,000 cash payroll in any calendar quarter.

  • It is a domestic employer with a cash payroll of $1,000 or more in a calendar quarter.

  • It is liable for federal unemployment tax.

  • It purchases a liable business (either all or a portion), or if the combination of the employer's payroll or employment and the payroll or employment of the business purchased meets liability criteria.

  • It is a nonprofit organization as defined in section 3306(c)(8) of the Federal Unemployment Tax Act and s. 501(c)(3) of the Internal Revenue Code and has four or more employees for a day (or portion of a day) during any 20 weeks in a calendar year.

  • It is a state, county, city, or joint governmental unit.

  • It is an Indian tribe or tribal unit.

Who are Employees? - The following definitions will aid you in understanding who should be considered employees.

  • Employment - Any service done by an employee for the employer.

  • Employee - A person who is subject to the will and control of the employer as to what must be done and how it is done.

  • Casual Labor - Work that is not in the course of the employer's regular trade or business and which is occasional, incidental, or irregular. Do not confuse casual labor with temporary or part-time employment. A corporation cannot have casual labor.

  • Independent Contractor - A person not subject to the will and control of the employer. The employer does not control or direct the manner or method of job performance. The general public is aware that the person is an independent contractor.

  • Officers of a Corporation - Any officer of a corporation performing services for the corporation is an employee of the corporation during tenure of office, even when no compensation is received for these services. Compensation, other than dividends upon shares of stock and board of director fees, is presumed to be payment for services performed.

  • Limited Liability Company (LLC) - A limited liability company is treated the same as it is classified for federal income tax purposes. A person performing services for an LLC, treated as a corporation for federal income tax purposes, is an employee. A person, other than a partner or exempt employee of a partnership, performing services for an LLC treated as a partnership for federal income tax purposes, is an employee. A person, other than the sole proprietor or an exempt employee of a sole proprietorship, performing services for an LLC, treated as a sole proprietorship for federal income tax purposes, is an employee. A single member LLC is treated as the employer.

  • S Corporation - Salaries paid to corporate officers are considered wages. All or part of the distribution of income paid to corporate officers who are active in the business and are performing services for the business can be considered wages.

  • Employee Leasing Company - An employee leasing company is an employing unit that has a valid and active license under Chapter 468, Florida Statutes.

  • Salesperson - Any individual paid solely by commission under your direction and control is an employee. The law exempts insurance agents, real estate agents, and barbers who are paid solely by commission. If they are paid by salary only or salary and commission, both are taxable and the exemption does not apply.

  • Agricultural Labor - Any service performed on a farm in the employ of the owner, tenant, or any other operator of a farm in connection with the production or harvesting of any agricultural or horticultural commodity or in connection with the maintenance or operation of farm equipment or grounds.

Wages - These are payments for services in employment, including commissions, bonuses, back pay awards, and the cash value of all payments in any medium other than cash. The cash value of meals and lodging will be exempt if it is included as a condition of employment for the convenience of the employer.

Sick and accident disability payments are wages when paid by an employer to an employee in the six calendar months after the calendar month the employee stopped working. Payments made under a workers' compensation law are not wages. Tips are covered wages if received while performing services that are considered employment and are included in a written statement furnished by the employee to the employer.

Reporting Wages - Wages must be reported to the Florida Department of Revenue each calendar quarter by filing an Employer's Quarterly Report. The report must list total wages paid to covered workers, excess wages, taxable wages, and tax due and show each employee's name, social security number, and total wages paid during the period. If an employer is operating two business units and the secondary unit(s) has a cumulative total of at least ten employees, the employer must submit Multiple Worksite Report.

How Much Do You Pay? - The tax rate for new employers is .0270 (2.7%). For years 2016 and 2017, the first $7,000 in wages paid to each employee during a calendar year is taxable. Any amount over the $7,000 is considered excess wages and is not subject to tax. Excess wages can never be greater than gross wages.

When a new employer becomes liable for the tax, the initial rate of 2.7% will remain at that rate until the employer has reported for 10 quarters. The account will then be rated by dividing the total benefits charged to the account by the taxable payroll reported for the first 7 of the last 9 quarters immediately preceding the quarter for which the rate is effective.

The only exception is for employers liable by succession who choose to accept the tax rate of the previous employer, along with the responsibility of paying any outstanding amounts due. At that time, a tax rate will be calculated using the employment record and the rating factors, which are built into the Reemployment Assistance Law.

The maximum tax rate allowed by law is .0540 (5.4 %), except for employers participating in the Short Time Compensation Program. Rate notices are mailed to all contributing employers each year.

The minimum tax rate effective for years 2016 and 2017 is .0010 (0.10%).

Employee Leasing Companies - In 2012, legislation was passed to allow employee leasing companies (ELCs) to elect by July 2, 2012 to report and pay tax due for 2013 using the tax rate for each client. Employee leasing companies that are newly licensed on or after July 1, 2012, have 30 days to notify the Department of Revenue of their election.

Important to Report Timely - Employers have one month after the end of each quarter to file reports and pay tax. To avoid penalty and interest, you must report and pay your tax on time. Unpaid tax may also affect your future tax rate. Reports and payments sent by mail are considered filed and paid as of the postmark date.

Corporate Tax

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 are NOT required to file a corporate return.

Corporations and other artificial entities, including those located in other states, that are partners in a partnership or members of a joint venture doing business in Florida must file a corporate return. A partnership must file a partnership return if it is doing business in Florida and a corporation is one of the partners.

List of Business Types

  • A limited liability company (LLC), classified as a corporation for Florida and federal income tax purposes, is subject to the Florida Income Tax Code and MUST file a Florida corporate income tax return.

  • An LLC, classified as a partnership for Florida and federal income tax purposes, MUST file a partnership return if one or more of its owners is a corporation. In addition, the corporate owner of an LLC that is classified as a partnership for Florida and federal income tax purposes MUST file a Florida corporate income tax return.

  • A single member LLC, disregarded for Florida and federal income tax purposes, does NOT have to file a separate Florida corporate income tax return. However, the income of the company is not exempt from tax if a corporation owns the company, whether directly or indirectly. In this case, the corporation MUST file a corporate return reporting its own income, and the income of the single member LLC.

  • S corporations usually do NOT have to file a Florida corporate income tax return unless they pay federal income tax on Line 22c of federal Form 1120S.

    Tax-exempt organizations usually do not have to file a Florida corporate income tax return unless they have "unrelated trade or business income" for federal income tax purposes.

  • Homeowner and condominium associations that file a federal corporate return MUST file Florida corporate return regardless of whether any tax may be due. However, if they file a U.S. Income Tax Return for Homeowners Associations (federal Form 1120-H), they do NOT have to file a Florida return.

Tax Base and Rate - Florida corporate income tax liability is computed using federal taxable income, modified by certain Florida adjustments, to determine adjusted federal income. A corporation doing business outside Florida may apportion its total income. Adjusted federal income is apportioned to Florida using a three-factor formula. The formula is a weighted average, designating 25 percent each to factors for property and payroll, and 50 percent to sales. You should add nonbusiness income allocated to Florida to the Florida portion of adjusted federal income. You should then subtract an exemption of up to $50,000 to arrive at Florida net income. The corporate tax is computed by multiplying Florida net income by 5.5 percent.

Tangible Tax

Section 193.052, Florida Statutes, requires that all tangible personal property be reported each year to the Property Appraiser's office. Tangible personal property is everything other than real estate that is used in a business or rental property. Examples of tangible personal property are computers, furniture, tools, machinery, signs, equipment, leasehold improvements, supplies, and leased equipment.

Anyone owning Tangible personal property on January 1 must file a tax return by April 1 each year unless you were notified in writing by the county property appraiser that the filing requirement has been waived. Every new business owning tangible personal property on January 1 must file an initial tax return. In any year the assessed value of your tangible personal property exceeds $25,000, you are required to file a return. Taxpayers who lease, lend or rent property must also file a return.

Other Business Taxes

Florida businesses my be subject to other taxes than those listed above. Examples are communications tax, pollutants tax, fuel tax. insurance premiums tax, and severance tax.