Overview of Florida Taxes
Florida has no state income tax, which makes it a popular state for retirees and tax-averse workers. If you’re moving to Florida from a state that levies an income tax, you’ll get a pleasant surprise when you see your first paycheck. Additionally, no Florida cities charge a local income tax. That means the only taxes you’ll see withheld from your paycheck are federal taxes.
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- Our Tax Expert
Jennifer Mansfield, CPA Tax
Jennifer Mansfield, CPA, JD/LLM-Tax, is a Certified Public Accountant with more than 30 years of experience providing tax advice. SmartAsset’s tax expert has a degree in Accounting and Business/Management from the University of Wyoming, as well as both a Masters in Tax Laws and a Juris Doctorate from Georgetown University Law Center. Jennifer has mostly worked in public accounting firms, including Ernst & Young and Deloitte. She is passionate about helping provide people and businesses with valuable accounting and tax advice to allow them to prosper financially. Jennifer lives in Arizona and was recently named to the Greater Tucson Leadership Program.
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Florida Paycheck Calculator
Florida Paycheck Quick Facts
- Florida income tax rate: 0%
- Median household income: $53,267 (U.S. Census Bureau)
- Number of cities that have local income taxes: 0
How Your Florida Paycheck Works
Living in Florida or one of the other states without an income tax means your employer will withhold less money from each of your paychecks to pass on to tax authorities. But there’s no escaping federal tax withholding, as that includes both FICA and federal income taxes. FICA taxes combine to go toward Social Security and Medicare. The FICA tax withholding from each of your paychecks is your way of paying into the Social Security and Medicare systems that you’ll benefit from in your retirement years.
Every pay period, your employer will withhold 6.2% of your earnings for Social Security taxes and 1.45% of your earnings for Medicare taxes. Your employer will match that by contributing the same amount. (Note that if you’re self-employed, you’ll need to pay the self-employment tax, which is the equivalent of twice the FICA taxes - 12.4% and 2.9% of your earnings. Half of those are tax-deductible, though.) Earnings over $200,000 will be subject to an additional Medicare tax of 0.9%, not matched by your employer.
In December 2017, President Trump signed a new tax plan into law. This led to new tax withholding guidelines in early 2018, which you should have noticed when they took effect. While there are no big changes for 2019, it’s a good idea to just look over your W-4 to see if everything is still correct.
For 2020, the IRS issued some notable revisions for the Form W-4. Rather than asking you to list total allowances, the 2020 W-4 uses a five-step process that allows filers to enter personal information, claim dependents and indicate any additional income or jobs. Filers must also input dollar amounts for income tax credits, non-wage income, itemized and other deductions and total annual taxable wages. For the most, these W-4 changes mainly affect those adjusting their withholdings or changing jobs. In turn, only employees that are hired on Jan. 1 2020 or after must fill out a new W-4. The tax return you file in April, 2021, will contain any adjustments you’ve made to your withholdings now.
Your employer will also withhold money from every paycheck for your federal income taxes. This lets you pay your taxes gradually throughout the year rather than owing one giant tax payment in April. The rate at which your employer will apply federal income taxes will depend on your earnings; on your filing status (e.g. married vs. single); and on taxable income and/or tax credits you indicate W-4 form.
Your employer might also withhold money if you’ve instructed it to do so as part of your employee benefit enrollment. For example, you might instruct your employer to withhold 10% of your earnings for a 401(k). Money you contribute to a 401(k) is pre-tax, which means the contributions come out of your paycheck before income taxes are removed. The advantage of pre-tax contributions is that they lower your taxable income.
You can also make pre-tax contributions by enrolling in flexible spending accounts (FSAs) and health savings accounts (HSAs). If you enroll in an employer-sponsored health insurance plan, it will affect your paycheck as well, but your monthly premium contributions are not pre-tax.
When you look at your pay stub you’ll see the above factors reflected. You won’t see any Florida income tax withholding because there is no Florida state income tax. The same goes for local income taxes.
In other words, if you move to Florida from a state like California that has an income tax and you make the same salary, your Florida paychecks will be bigger than your California paychecks were. The lack of a state income tax might not be a determining factor for you while you’re in your working years, but it might play a role when you’re deciding where to live in retirement and you’re on a fixed income.
Florida Median Household Income
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Before you get too excited about Florida’s lack of an income tax, remember that no state is entirely tax-free. You’ll still pay property taxes if you own a home in Florida, and other purchases you make will be subject to the state’s 6% base sales tax rate, plus any county sales taxes that may apply.
A financial advisor in Florida can help you understand how taxes fit into your overall financial goals. Financial advisors can also help with investing and financial plans, including retirement, homeownership, insurance and more, to make sure you are preparing for the future.
If the lack of a state income tax has you dreaming of moving to the Sunshine State, check out our guide to Florida mortgages, which lays out the most important information about mortgages in Florida to help you with the homebuying process.
How You Can Affect Your Florida Paycheck
If you want a bigger Florida paycheck you can ask your employer about overtime, bonuses, commissions, stock options and other forms of supplemental wage pay. Just like regular income, supplemental wages are not taxed at the state level in Florida. However, your employer will withhold federal income taxes from your supplemental wage payments.
If you want to shelter more of your Florida earnings from a federal tax bite, you can max out your 401(k) so that more of your paycheck is going to tax-advantaged retirement savings. You can also contribute to a tax-free FSA or HSA to use for medical expenses. If you opt to contribute to an FSA account, remember that the money is use-it-or-lose-it and doesn’t roll over from year to year.
But don’t stop there. Ask your employer or HR department about other tax-advantaged places for your money, such as commuter benefits that let you pay for parking or public transit with pre-tax dollars.
Most Paycheck Friendly Places
SmartAsset's interactive map highlights the most paycheck friendly counties across the country. Zoom between states and the national map to see data points for each region, or look specifically at one of the four factors driving our analysis: Semi-Monthly Paycheck, Purchasing Power, Unemployment Rate, and Income Growth.
Methodology Our study aims to find the most paycheck friendly places in the country. These are places in the country with favorable economic conditions where you get to keep more of the money you make. To find these places we considered four different factors: semi-monthly paycheck, purchasing power, unemployment rate and income growth.
First, we calculated the semi-monthly paycheck for a single individual with two personal allowances. We applied relevant deductions and exemptions before calculating income tax withholding. To better compare withholding across counties we assumed a $50,000 annual income. We then indexed the paycheck amount for each county to reflect the counties with the lowest withholding burden.
We then created a purchasing power index for each county. This reflects the counties with the highest ratio of household income to cost of living. We also created an unemployment rate index that shows the counties with the lowest unemployment. For income growth, we calculated the annual growth in median income over five years for each county and indexed the results.
Finally, we calculated the weighted average of the indices to yield an overall paycheck friendliness score. We used a one half weighting for semi-monthly paycheck and a one-sixth weighting for purchasing power, unemployment rate and income growth. We indexed the final number so higher values reflect the most paycheck friendly places.
Sources: SmartAsset, government websites, US Census Bureau 2017 5-Year American Community Survey, MIT Living Wage Study, Bureau of Labor Statistics