What Are the Main Tax Rates in Florida?

Florida’s reputation as a low-tax state attracts new residents and businesses due to its unique tax structure. Understanding the primary taxes levied is important for anyone living, working, or operating a business in the state. The following is an overview of the main tax rates that individuals and companies in Florida will encounter.

Florida’s Personal Income Tax

One of the defining features of Florida’s tax system is the absence of a personal income tax, which is prohibited by the state constitution. For residents, this means that income earned from wages, salaries, and bonuses is not subject to any state-level taxation. This zero-tax policy extends to all forms of personal earnings, providing a financial advantage. Income from investments, such as capital gains and dividends, is not taxed by the state. Similarly, all forms of retirement income, including distributions from pensions, 401(k)s, and IRAs, are not taxed at the state level.

State and Local Sales Tax

While Florida forgoes an income tax, it relies heavily on sales tax revenue. The state imposes a general sales tax rate of 6% on the sale or rental of most goods and certain services. This base rate applies statewide, but the final tax paid by a consumer is often higher due to local option sales taxes, also known as discretionary sales surtaxes. These local taxes are levied by individual counties to fund specific projects like infrastructure and public safety.

These discretionary surtaxes currently range from 0.5% to 1.5%, which can bring the total combined sales tax rate in some counties to as high as 7.5%. For certain large purchases, such as vehicles or boats, this local surtax may only apply to the first $5,000 of the sales price.

Many purchases are exempt from sales tax. Most non-prepared food items, often referred to as groceries, are not taxed. Other exemptions include prescription drugs and many medical supplies like bandages and diabetic testing supplies. However, prepared foods, such as those sold in restaurants, are subject to the full sales tax rate.

Understanding Property Taxes

Property taxes in Florida are a local affair, not a state one. These taxes are assessed and collected at the county level and are a primary funding source for local governments, including municipalities and school districts. The amount of tax a property owner pays is determined by two key factors: the ‘assessed value’ of the property and the ‘millage rate’ set by local taxing authorities. The assessed value is determined annually by the county property appraiser based on the property’s market value.

A millage rate is the tax rate per $1,000 of taxable property value; one mill equates to $1 of tax for every $1,000 of value. Each local government entity (county, city, school board) sets its own millage rate, and the total rate for a property is the sum of these individual rates.

To reduce this tax burden, Florida offers a Homestead Exemption for primary residences. The first $25,000 of a property’s assessed value is exempt from all property taxes, including those for school districts. An additional exemption applies to the assessed value between $50,000 and $75,000, but this portion does not apply to school district taxes. As of 2025, this second exemption amount is adjusted annually for inflation.

Corporate Income Tax Rate

Florida levies a corporate income/franchise tax on the net income of certain businesses operating in the state. As of 2025, the corporate income tax rate is 5.5%. This tax is calculated based on the corporation’s federal taxable income, with some state-specific adjustments, and applies to traditional C-corporations that conduct business or earn income in Florida.

Pass-through entities, such as S-corporations, Limited Liability Companies (LLCs), partnerships, and sole proprietorships, are not subject to the corporate income tax at the entity level. For these businesses, profits and losses are “passed through” to the owners’ personal income. Since Florida has no personal income tax, this income is not taxed at the state level.