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. No Florida cities charge a local income tax.
This calculator reflects the 2018 federal withholding tax changes.
Click here to learn more about how the Trump Tax Plan will affect you.
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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 Quick Facts
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. That includes both FICA taxes and federal income taxes.
FICA taxes are Social Security taxes and Medicare taxes. The FICA tax withholding from each of your paychecks is your way of paying into the Social Security and Medicare system that you’ll benefit from in your 60s and beyond.
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. So, if you’re self-employed you’ll need to withhold 12.4% and 2.9% of your earnings. 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. The IRS has since released updated tax withholding guidelines and taxpayers should have seen changes to their paychecks, to reflect the new tax plan, starting in February 2018. For the time being, taxpayers do not need to fill out a new W-4. Employers will use the withholdings on your current form.
Your employer will also withhold money for your federal income taxes. This withholding from every paycheck lets you pay as you go rather than get bigger paychecks throughout the year and then owe 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 (married, single) and on the allowances you claim when you fill out your W-4 form. More allowances means less withholding/bigger paychecks but a smaller refund/bigger tax bill. Fewer allowances means more withholding/smaller paychecks but a bigger refund/smaller tax bill.
Your employer might also withhold money if you’ve instructed him or her 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), in which case that money would be taken out before taxes are applied, saving you money.
Or you might enroll in an employer-sponsored health insurance plan that means you pay a chunk of each paycheck toward your premiums. Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) are benefits that can shrink your paycheck but provide other advantages, as are pre-tax commuter benefits.
Florida Median Household Income
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When you look at your Florida 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, which aren’t levied in Florida.
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, once you’re on a fixed income.
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.
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.
But 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.
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 2016 5-Year American Community Survey, MIT Living Wage Study, Bureau of Labor Statistics