After Sunday night’s Academy Awards, America’s annual season of awards begins to wind down. Naturally, these award shows remind us of all the “best of” accolades that have been regularly bestowed on our region by a number of media organizations.
Topping the List
To wit, Southwest Florida perennially tops just about any list of America’s best places to live, work, play, vacation, start a business, buy a home or retire. Our beaches are repeatedly ranked among the most beautiful in the world, our public schools among the highest-rated academically in all of Florida; and our colleges and universities among the best in their respective disciplines.
Meanwhile, our cultural scene is continually lauded for its depth, variety and bold creative choices; while the region’s emerging reputation as an unparalleled venue for certain prestigious sporting events has spread to such an extent that it has been tapped to host several high-profile international competitions in the weeks and months ahead.
Even as this column is being written, Siesta Key’s public beach has just been named the best beach in America on TripAdvisor.com’s 2015 Travelers’ Choice Awards. And the accolades just keep on coming.
In the Category of Tax Season
Alas, after awards season comes tax season. Still, even where taxes are concerned, Florida is a big winner. Here’s why:
First and foremost, Florida does not burden its residents with a state income tax—and has enshrined this hands-off policy in the state’s constitution. As such, Florida has consistently achieved the #1 ranking for its individual income tax structure by the non-partisan, not-for-profit Tax Foundation (taxfoundation.org).
To be fair, there are six other states that have earned the top ranking, including Alaska, Nevada, South Dakota, Texas, Washington and Wyoming. But in which of these would you rather spend the sort of ferocious winter that is currently making daily headlines.
The Tax Foundation analyzes each state’s tax code in four additional categories, including corporate, sales, property and unemployment insurance taxes. Ranked number one for its individual income tax, Florida ranks third in unemployment tax, 12th in sales tax, 14th in corporate tax and 16th in property tax. Overall, the state was ranked 5th last year, with only Wyoming, South Dakota, Nevada and Alaska rated higher.
Additionally, Florida does not collect a state inheritance (or estate) tax above the federal estate tax; and protects its residents from losing their homes to creditors other than their mortgage holders.
I’d Like to Thank Everyone from Home
On the subject of homes, Florida homeowners are now constitutionally protected against the sort of runaway property appreciation that occurred in many markets during the housing boom. The “Save our Home Act,” as amended by Florida voters in 2008, provides for an increased homestead exemption on a primary residence. Previously capped at $25,000, the assessed value of a property for tax purposes now has an exemption from the first $50,000 of taxable value—for all taxing bodies except the local school district—and a $25,000 exemption on taxable value for the school district. Moreover, once the property is officially homesteaded, its assessed value for tax purposes cannot increase more than 3% or the Consumer Price Index (CPI), whichever is less. It is also worth noting that if the property is not your primary residence, its assessed value for tax purposes is limited to 10% each year.
(Important note: If you plan to make your Florida home your primary residence you must file for a homestead exemption by no later than March 1.)
At the end of the day, Florida derives the bulk of its operating revenue from sales and property taxes. That being said, it’s total state and local tax burden of 9.18% ranks 20th lowest out of the 50 states, and is below the national average of 9.8%.
Year round sunshine and warm temperatures are what come to mind when most people think of Florida. But if you are seriously considering moving yourself, a business—or both—to Florida, don’t forget that our tax climate is just as Oscar-worthy as our weather.