The goal of an investment — whether you place your money in stocks, a business or real estate — is generally to end up with more money than you started with. When you earn enough money from investments, you’ll have to start thinking about the tax implications of them. These come in the form of capital gains taxes. While the federal capital gains tax is the one most often discussed in the media and by politicians, states can also levy a capital gains tax. However, in concert with its nonexistent income tax, Florida does not charge state capital gains taxes. Despite this, it’s important to plan for taxes with your investments, which a financial advisor can help you with.
What Is the Capital Gains Tax?
The capital gains tax is a tax on money earned from investments rather than from wages or salary, which are generally subject to income tax. Capital gains are treated differently based on how much time transpired between the investor’s purchase and sale of the asset.
Short-term capital gains taxes apply to returns made from investments that were held for less than a year. These taxes are generally higher, and, at the federal level, are taxed as if they were regular income.
Long-term capital gains taxes, on the other hand, apply to capital gains made from investments held for at least a year. At the federal level and in some states, these are taxed at a lower percentage than normal income. There may be a bracketed system where the rate is higher as the dollar value of the capital gains go up, or there may be a flat tax rate for all long-term capital gains.
Florida Capital Gains Taxes
Florida does not assess a state income tax, and as such, does not assess a state capital gains tax. Any money earned from investments will be subject to the federal capital gains tax described below, but you won’t owe any money to the Sunshine State.
How the Federal Capital Gains Tax Works
Capital gains are taxed federally. There are different tax schedules for short-term and long-term capital gains. Short-term capital gains are taxed just like regular income, according to the following schedule:
| 2025 Short-Term Capital Gains Tax Rates | Single Filers | Married Couples Filing Jointly | Heads of Households |
|---|---|---|---|
| 10% | Up to $11,925 | Up to $23,850 | Up to $17,000 |
| 12% | $11,926 to $48,475 | $23,851 to $96,950 | $17,001 to $64,850 |
| 22% | $48,476 to $103,350 | $96,951 to $206,700 | $64,851 to $103,350 |
| 24% | $103,351 to $197,300 | $206,701 to $394,600 | $103,351 to $197,300 |
| 32% | $197,301 to $250,525 | $394,601 to $501,050 | $197,301 to $250,500 |
| 35% | $250,526 to $626,350 | $501,051 to $751,600 | $250,501 to $626,350 |
| 37% | Over $626,350 | Over $751,600 | Over $626,350 |
Long-term capital gains, on the other hand, are taxed at either 0%, 15% of 20%. The rate you receive will depending on your total gains earned. The schedule goes as follows:
| 2025 Capital Gains Tax Rate | For Unmarried Individuals | For Married Couples Filing Jointly | For Heads of Households |
|---|---|---|---|
| 0% | Up to $48,350 | Up to $96,700 | Up to $64,750 |
| 15% | $48,351 to $533,400 | $96,701 to $600,050 | $64,751 to $566,700 |
| 20% | Over $533,400 | Over $600,050 | Over $566,700 |
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Florida’s Overall Tax Picture
Florida has a well-earned reputation as a haven of low taxes. As mentioned above, there is no state income tax, which means retirement income is also not taxed. That, and Florida’s tropical climate, are why it’s the most popular retiree destination in the U.S.
Florida’s state sales tax is 6%, and with local sales tax ordinances, the total sales tax can climb as high as 8%. Property taxes in Florida have an average effective rate of 0.82%, in the middle of the pack nationally.
There is no estate tax or inheritance tax in Florida.
General Tips to Lower Capital Gains Taxes
If you want to minimize your capital gains taxes, here are six general tips that could help you lower your liability:
- Hold investments longer: To benefit from lower long-term capital gains tax rates, hold your investments for more than a year before selling. This shifts your gains from the higher short-term rate to the more favorable long-term rate.
- Utilize tax-loss harvesting: Offset your capital gains by selling other investments at a loss. This strategy, known as tax-loss harvesting, can reduce your taxable income by using the losses to counterbalance gains.
- Maximize retirement accounts: Invest in tax-advantaged accounts like Roth IRAs, traditional IRAs, and 401(k)s. Gains in these accounts are not subject to capital gains taxes, providing they meet specific conditions for withdrawal.
- Consider the timing of sales: If your income varies, plan the sale of profitable investments for years when your income will be lower. This might place you in a lower tax bracket, reducing the capital gains tax rate applied to your investments.
- Gift appreciated assets: Instead of selling appreciated stocks or other assets, consider gifting them to family members in lower tax brackets. The recipient may pay a lower tax rate on the gains than you would. Additionally, you can take advantage of the gift tax limit, which applies when gifting appreciated assets. For 2025, you can gift up to $19,000 worth of assets per recipient without triggering the gift tax.
- Invest in opportunity zones: Consider investing in qualified opportunity zones to boost underdeveloped areas economically. This investment can offer tax benefits, such as deferring and potentially reducing capital gains taxes if held over the long term.
Bottom Line
Florida has no state income tax, which means there is also no capital gains tax at the state level. If you earn money from investments, you’ll still be subject to the federal capital gains tax. Again, this varies based on whether the money comes from short- or long-term holdings. Despite Florida’s major tax benefits, make sure you’re prepared to pay the federal capital gains tax when you sell your investments.
Investment Planning Tips
- If you need help with the capital gains tax or any other investments, consider working with a local financial advisor. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Asset allocation is key to a successful investment plan. Use SmartAsset’s asset allocation calculator to see what your optimal portfolio looks like.
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