1. Florida has no state income tax
Florida is one of only seven states that impose no income tax and is the only “no tax” state (two of the others are Alaska and South Dakota). Since Florida’s prohibition against state income tax is enshrined in the State Constitution.
Florida’s Constitution also prohibits municipalities and counties from levying any personal income tax. Compare that to California – which imposes a maximum tax rate of 10.3%, with an additional 1-3% income tax thrown in by many state municipalities.
2. Florida has no state death tax or estate tax
The Florida Constitution bans the separate imposition of an estate or inheritance tax of the kind present in many other states. The legislation, known as the Economic Growth and Tax Relief Reconciliation Act of 2001, made significant changes to the federal estate tax, greatly increasing the federal tax exemption. While this change has been beneficial to individual taxpayers, it has been very bad for the states themselves. Until 2005, states shared in the revenue generated by the federal estate tax, receiving an amount equal to what is known as the “State Death Tax Credit.”
3. Florida Homestead Law
Florida’s Homestead Law protects the Florida resident from losing his or her home to a creditor or any other lien holder, except for mortgages. Furthermore, this protection is found in the state Constitution.
4. Florida “Save Our Home Act”
This act provides for a homestead exemption on a Floridian’s primary residence. Once qualified, the assessed value of the property for tax purposes carries an exemption for the first $50,000 of taxable value for all taxing entities except the school district (which allows a $25,000 exemption). Also, once the property is qualified for the homestead exemption, the assessed value for tax purposes cannot rise more than 3% in any given year. Thus, over long periods of time, a property’s market value will increase more than its assessed value, resulting in equity that you do not pay tax on.
5. Tenancies by the Entirety
Tenancy by the entirety is a form of joint ownership for married couples only and provides excellent asset protection benefits. To qualify as tenants by the entirety property in Florida, the interest in the property for the spouses must have been created at the same time, in the same instrument, giving both spouses ownership and control and an identical interest in the property, and they must have been married at the time this occurred. However, in the case where both spouses are indebted to a creditor, there is no tenancy by entireties property. This protection exists only if a creditor has a claim against only one individual of the married couple.