People move to Florida in their golden years for many reasons—some for the sandy beaches, others for the warmer weather. But the Sunshine State has built a reputation as a tax haven—a place where residents can keep more of their hard-earned dollars in their own pockets.
And it’s true! With no state income taxes and one of the lowest tax burdens in the country, it’s no wonder people are moving to Florida in droves.1,2
But what about those so-called death taxes (like the estate tax and the inheritance tax)? Do Floridians have to worry about the tax man reaching out and taxing their estate from beyond the grave?
Here’s the short answer: No. Florida doesn’t have an estate tax or an inheritance tax. But that doesn’t necessarily mean you’re off the hook from estate taxes altogether. Let’s dive into that.
What Is the Estate Tax and Inheritance Tax? And What’s the Difference?
Real quick, let’s talk about what estate and inheritance taxes are and what the key differences are between the two:
- An estate tax is a tax on the total value of your estate—cash, property, investments and other assets (like your extensive baseball card collection). It’s paid after you die and before your stuff is passed on to your loved ones. There’s a federal estate tax, and some states have their own estate tax too.
- Inheritance taxes, on the other hand, are paid by your heirs (aka the people inheriting your estate). While there isn’t an inheritance tax at the federal level, there are a handful of states that still charge an inheritance tax.
So, Does Florida Have an Estate Tax or Inheritance Tax?
Like we mentioned earlier, Florida has no state estate tax or inheritance tax! In fact, the Sunshine State is one of 33 states that does not have either one.
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But although Tallahassee doesn’t have an estate tax, Washington does.
But don’t worry, most folks don’t have to worry about the federal estate tax either. That’s because estate tax only applies to estates that are worth more than $12.92 million for an individual or $25.84 million for a married couple.3 So, unless your net worth is at least eight figures, you’re off the hook!
The History of Florida’s Estate Tax
Once upon a time, Florida did have an estate tax. But it went away in 2004 after a tax change at federal level made the estate tax unnecessary. You see, federal law used to let taxpayers claim a tax credit on their federal estate tax return for their state death taxes, which lowered the tax bill owed on their estates.
But then the federal government changed the state death tax credit to a tax deduction for state estate taxes. Since Florida’s estate tax was based solely on that federal credit, the state’s estate tax was no longer needed, and it went away. Any Florida resident who died on or after January 1, 2005, no longer owed any estate tax to the state.4
The Florida Constitution now forbids an estate tax or inheritance tax from becoming a thing.5 And since the Florida state legislature can’t pass laws that go against the state constitution, Florida voters would have to amend the constitution (which requires 60% voter approval) before any kind of death tax can be put on the books. In other words, you don’t have to worry about either of those taxes coming to Florida any time soon.
But it is possible that a Florida resident who dies could still owe an estate tax for property located in other states. For example, if you live in Florida but own several rental properties in Connecticut—which does have an estate tax—then you might owe estate tax on that property when you die. Death has no borders, apparently.
And, of course, if your estate is larger than $12.92 million for an individual or $25.84 million for a married couple, then you’ll owe the federal estate tax we mentioned earlier.
Estate Planning the Right Way
No matter how large or small your estate is—and whether or not it’s large enough to trigger the dreaded death tax—you need to make sure you take the time to do proper estate planning. All that means is deciding what’s going to happen to everything you own after you pass away.
Here are three things you can do to help make sure all your affairs are in order:
1. Make a will.
For most people, that means making a will. And let’s be clear here: Everybody needs a will. Whether you’re single or married, have two kids or 10 kittens, 29 or 92 years old . . . you need a will. No exceptions!
A will helps your loved ones know exactly what you want and provides clarity when they need it the most. The last thing you want is to leave them with the stress (and hefty costs) of fighting over who gets what in court while they’re grieving your loss.
With RamseyTrusted provider Mama Bear Legal Forms, making a state-specific will that’s tailored to your needs is super easy. Don’t put this off for another day, folks. You can leave a legacy of intentionality and generosity today by creating your online will—it’s one of the most important things you’ll ever do.
2. Meet with an estate planner.
If you have a business or have a really large or complex estate, though, you might need more than just a simple will.
You’ll want to set up a meeting with a financial advisor or a lawyer who has estate planning experience to help make sure all your bases are covered. Plus, they might be able to find ways to minimize your estate taxes and protect your hard-earned wealth.
3. Talk with a tax pro.
If you still have questions about the estate tax and how it might impact the inheritance you leave behind to your loved ones, you should talk with a tax pro who can give you answers and help you take steps to prepare for every scenario.
Don’t have a pro? We can connect you with a Ramsey Trusted tax pro who’s part of our nationwide network of Endorsed Local Providers (ELPs). They’ve got the heart of a teacher and are vetted by our team, which means you can trust them with all your tax questions!