Is Social Security Taxable in Florida?
This guide clarifies the tax treatment of Social Security in Florida, explaining the key differences between state and federal obligations for retirees.
Deciding where to retire involves navigating many financial considerations. A primary factor in this decision is understanding how retirement income, particularly Social Security benefits, will be taxed. State and federal tax laws can impact a retiree’s disposable income, and the tax landscape varies considerably from one state to another. A clear comprehension of these tax obligations is a fundamental part of retirement planning.
Florida State Tax on Social Security
Florida’s approach to taxing Social Security is straightforward because the state constitution prohibits a personal income tax. Consequently, Social Security benefits are not taxed at the state level in Florida, regardless of a retiree’s total income. This tax treatment means that 100% of the Social Security benefits received by a Florida resident are exempt from state income taxation, which simplifies tax planning for residents.
Federal Taxation of Social Security Benefits
Even though Florida does not tax Social Security, these benefits may still be subject to federal income tax. The Internal Revenue Service (IRS) has its own distinct rules for taxing these benefits, which apply to all U.S. citizens regardless of their state of residence. Whether a retiree’s benefits are taxable by the federal government depends entirely on their income level, so relocating to Florida does not remove the potential for federal tax liability.
Calculating Your Federal Taxable Amount
The IRS uses a formula based on “combined income” to determine if a portion of your Social Security benefits is taxable. Combined income is calculated by adding your Adjusted Gross Income (AGI), any nontaxable interest, and one-half of your Social Security benefits for the year. The total amount of your benefits will be reported in Box 3 of Form SSA-1099.
For an individual filing as single, head of household, or qualifying widow(er), if your combined income is between $25,000 and $34,000, you may have to pay tax on up to 50% of your benefits. If your combined income is more than $34,000, up to 85% of your benefits may be taxable.
For those married and filing jointly, if your combined income is between $32,000 and $44,000, you may be taxed on up to 50% of your Social Security benefits. If your combined income exceeds $44,000, up to 85% may be taxable. To manage this potential liability, you can use Form W-4V, Voluntary Withholding Request, to have federal taxes withheld from your monthly payments.
Florida’s Tax Treatment of Other Retirement Income
Florida’s lack of a state personal income tax extends to all forms of retirement income, not just Social Security. Distributions from the following are not taxed at the state level:
- Pensions
- 401(k)s
- Traditional IRAs
- 403(b)s
While income from retirement accounts is not taxed, retirees in Florida will encounter other types of taxes. The state has a general sales tax rate of 6%, and most counties add their own local surtax. Property taxes are administered at the local level and can vary significantly by county, and Florida does not have an estate or inheritance tax.