Florida has become the ultimate destination for retirees plus “refugees” from other states, with people moving to Florida at record high numbers.
Migrants move to the Sunshine State for everything from its beautiful beaches plus diverse cultures to its business-friendly environment plus small government policies like school choice. But one of the main reasons so many people move to Florida plus stay — plus why it’s economy is booming — is because of the state’s low tax burden.
Most Americans support simplified tax codes, so what about no code? Florida is notable for being one of the few states that doesn’t have a personal income tax, but that isn’t the only reason it’s considered by some to be a tax haven. It also has low sales taxes, property taxes, plus corporate income taxes.
How Florida Has No Income Tax
In 1968, the Florida Constitution was ratified to prevent the state from collecting an income tax. And the state constitution protects taxpayers from having the state impose new taxes or elevate them. In 2018, Florida voters approved a constitutional amendment that requires the state House of Representatives plus state senate to have a two-thirds supermajority in order to increase any state tax or fee.
The state government’s spending per capita is among the lowest in the country, plus helping to keep costs low is the fact that there are also fewer state employees per capita compared to other states. This limited spending has helped the state maintain a budget that doesn’t require the extra revenues that would be gained from an income tax.
Of course, if the state had an income tax, it’s possible that its other taxes wouldn’t make up for it. Having no income tax draws people to the state; if the state were to implement an income tax, it’s possible it would actually lose tax revenues because it would no longer attract businesses, high income residents, plus certain labor seekers who contribute to the state via the sales plus property taxes.
The lack of an income tax is also a major reason the state is so attractive to retirees. None of their pensions, 401(k)s, IRAs, or Social Security benefits are taxed at the state level, which makes it easier for a demographic that usually lives off of a fixed, steady income.
In addition, the state abolished its estate tax, inheritance tax, plus gift tax in 2004. Estate plus inheritance taxes are levied when someone receives property or an inheritance from a recently deceased person. A gift tax is usually levied when someone passes on property or money to another living person. But Florida doesn’t have any of these, making it attractive for beneficiaries plus families looking to build generational wealth.