While retiring to Florida isn't the best choice for everyone, there are benefits to moving to the Sunshine State. Florida Although the warm climate and abundance of beaches are appealing, that's not all the state has to offer.
Florida is Most Tax-Friendly States for Retireesand many out-of-state retirees are finding out. For example, Kiplinger previously Migration Data Florida is Acquired residents From high tax states.
Best Places to Retire in Florida
If Florida is already your top choice for retirement, you're not alone. studyApproximately 12% of retirees from other states choose Florida as their destination, making it the top retirement destination in the United States.
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But you may be wondering where other Florida retirees are moving to. The same survey found that the majority of new Florida retirees chose the Palm Bay area as their home. Tallahassee was also a popular retirement destination for new Florida residents.
But no matter what part of Florida you look at, you should be able to get some sort of benefit, at least when it comes to taxes.
Florida doesn't tax retirement income
Perhaps the biggest reason people choose to retire in Florida is the state's tax system on retirement income. While there are a number of states that don't tax Social Security benefits, there aren't many. States with no income tax not at all.
Florida doesn't tax any income, regardless of source, which means if you return to work or cancel your retirement, you won't have to pay Florida state tax on your 401(k) distributions, investment income, or even your salary.
Florida Tax Cuts
Florida's average combined state and local sales tax rate of 7.002% isn't necessarily lower than other states, but Florida offers more sales tax holiday days than any other state in the country, and some items, like baby furniture, are exempt year-round, which could be handy if you're planning on having young grandchildren come visit.
Additionally, Florida recently passed a $1.07 billion Florida Tax Cut Bill that includes a one-year tax exemption on residential property and flood insurance.
Florida property taxes are low
While Florida doesn't have the lowest property taxes in the U.S., its average median property tax bill of $2,386 is lower than most states, according to U.S. Census Bureau data. And with an average effective property tax rate of less than 1%, even homes with high tax assessments can still pay lower property taxes than usual.
Still, not everyone who moves to Florida will enjoy lower taxes, and some people will be able to save more than others.
- If the market value of your new home purchased in Florida is significantly higher than the home you owned in your previous state, you are unlikely to pay less property taxes in Florida.
- Home improvements can increase the tax assessment value of your property, so if your new home has extensive renovations, you may not save much on your property tax bill (if you can save at all).
Florida has no tax on lottery winnings
Florida is States that don't tax Mega Millions winsor any other lottery winnings. Depending on the amount you win, you could save millions of dollars.
Of course, most people will never win the lottery jackpot. But if you want to take home your lottery winnings, state taxes are something to consider. Remember, however, that federal taxes still apply. Lottery jackpots, including Powerball jackpots, are much less than advertised after taxes.
Why are some retirees leaving Florida?
But in recent years, some retirees have been fleeing Florida. For example, nearly 50,000 Floridians moved to Georgia alone in 2021, according to the report. U.S. Census Bureau data.
But if Florida is so great, why are some retirees leaving? Tax cuts are just one factor some people consider when deciding whether to stay or retire in Florida.
- For example, homeowner insurance premiums are high in Florida, and Kiplinger reports that insurers like AAA and Farmers Insurance are limiting their coverage in the state, potentially making it more difficult for Floridians to find affordable home and auto insurance.
- The heatwaves and rising temperatures are driving some people away from Florida. For example, last July was Miami's hottest month on record, according to data from the University of South Florida.
- Changes in Florida laws and state policies have led some Floridians to relocate. Controversial laws in Florida include the six-week abortion ban and the Parental Rights in Education bill (also known as the “Don't Say Gay” bill).
Therefore, before relocating to any state, it is advisable to consider all aspects of the new place and make the best decision for yourself and your family.
