Florida taxes for early retirees: sunshine, no income tax, pricey roofs

By Tom, CPA · Updated October 25, 2026

TL;DR: Florida has no personal income tax, so Roth conversions, IRA withdrawals and capital gains face only federal tax. The state collects through a 6% sales tax plus county surtaxes and property taxes, softened for homeowners by up to $50,000 of homestead exemption and the Save Our Homes cap (2.7% for 2026). Insurance is the real wild card.

Educational only, not tax, legal, or investment advice. Examples are illustrations, not predictions. Rules and limits change; verify current figures and talk to a qualified professional about your situation.

Florida's pitch to early retirees writes itself: no state income tax, warm winters and an entire economy designed around people who don't have to be anywhere at 9 a.m. For a FIRE household doing Roth conversions or harvesting gains, the lack of a state income tax can save thousands a year compared with high-tax states.

But Florida still needs money, and it collects it through sales taxes and property taxes. Then there's homeowners insurance, which isn't a tax but behaves like one with a bad attitude. Here's how the pieces fit.

CPA Warning Label: Contains no income tax. May contain hurricanes, HOA newsletters and insurance quotes that cause fainting.

No income tax status

Florida does not levy a personal income tax. That means, as of October 2026, Florida residents pay no state tax on:

• Wages, including part-time or Barista FIRE income
• Traditional IRA and 401(k) withdrawals and Roth conversions
• Pensions and Social Security
• Interest, dividends and capital gains

For early retirees, the big win is flexibility. A large Roth conversion or a home sale above the federal exclusion triggers only federal tax. That makes Florida a popular landing spot for people executing a Roth conversion ladder.

Florida also has no state estate tax. Federal estate tax still applies above the federal exclusion ($15 million per person in 2026).

Homestead exemption and Save Our Homes

Property tax is Florida's main lever on residents. Owner-occupants who make the home their permanent residence can claim the homestead exemption, worth up to $50,000 of assessed value:

• The first $25,000 applies to all property taxes, including school district taxes.
• An additional exemption of up to $25,000 applies to assessed value above $50,000, but not to school district taxes. Florida indexes this second portion for inflation.

The bigger long-term benefit is the Save Our Homes cap. Once a home has a homestead exemption, annual increases in its assessed value are limited to 3% or the change in CPI, whichever is lower. For 2026, Florida's DOR set that cap at 2.7%. In a rising market, the gap between market value and assessed value grows every year.

Two catches:

• The cap resets when you buy a new home, though Florida's portability rules may let you transfer some of the accumulated benefit to a new Florida homestead if you apply in time.
• You must apply. The deadline is generally March 1 with the county property appraiser, and you need to own and live in the home as your permanent residence as of January 1.

Additional exemptions exist for some seniors with limited income, veterans and people with disabilities; they vary by county.

Sales tax

Florida's state sales tax rate is 6%, and most counties add a discretionary sales surtax. Groceries and prescription drugs are generally exempt.

For a frugal early retiree, sales tax is a modest cost because it scales with spending. Frugal Fran, spending $40,000 a year, maybe half of it on taxable goods, pays sales tax on a far smaller base than Lavish Larry, who buys a boat, a second boat and a wakeboard shaped like a boat. Sales tax is the most voluntary tax there is.

Insurance costs

Insurance is where Florida's budget math gets real. Homeowners insurance premiums in many parts of the state, especially along the coast, can rival or exceed the property tax bill. Flood insurance is often separate and may be required by a lender in certain zones. Before moving:

• Get actual insurance quotes for specific homes, not averages from a forum.
• Ask about the roof's age; insurers care a lot.
• Price wind mitigation upgrades, which may lower premiums.
• Consider condos carefully, including association reserves and special assessments.

Insurance costs can change faster than taxes, so leave margin in your retirement budget.

Residency steps

Florida is easy to move to and occasionally hard to prove you moved to, especially if you're leaving a high-tax state that would like to keep taxing you. Common steps:

• File a Declaration of Domicile with the county clerk.
• Get a Florida driver's license and register vehicles in Florida.
• Register to vote in Florida.
• Claim the homestead exemption if you own your home.
• Move doctors, banks and important belongings, and update addresses everywhere.
• Spend most of your time in Florida and keep records.

Your old state decides whether you left; Florida declaring you a resident doesn't settle it. See changing state tax residency and the New York guide for an example of a state that checks.

Snowbirds and half-movers

Plenty of people try to live in Florida for part of the year and somewhere else the rest. That can work, but it's the most audited version of the plan. If you keep a home in a high-tax state and split your time, expect that state to look closely at day counts, where your stuff lives and where your family spends holidays. Homestead in Florida also requires that the Florida home be your permanent residence, so you can't claim a residence-based exemption in two states at once.

If a clean move isn't realistic, model the taxes as if you never left. If the savings still justify the hassle, document everything: travel records, credit card statements, phone location history and a calendar. A boring paper trail is cheaper than an exciting audit.

Common Florida mistakes

• Missing the homestead filing deadline the first year.
• Buying a coastal home before getting insurance quotes.
• Assuming no income tax means no tax planning; federal tax still applies to every conversion.
• Keeping the old state's driver's license "for convenience."

Illustration: Florida vs. a high-tax state

Illustration. Hypothetical couple doing a $60,000 Roth conversion each year for five years. In a state with an effective 5% tax on that conversion, the state bill is about $3,000 a year, or $15,000 over five years. In Florida, it's $0. If moving also raises their insurance by $3,000 a year, the savings disappear. The point: compare the full bill, not just one line. The state tax move calculator helps.

Federal taxes still apply

Whatever Florida does, the federal system still sets the base. For 2026 the federal standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly, and long-term capital gains can fall in a 0% bracket at lower incomes. Many early retirees aim to fill the low federal brackets each year with Roth conversions or gain harvesting. State tax then rides on top, so check how Florida treats each type of income before deciding how much to convert. Social Security can become partly taxable federally as other income rises, and Medicare premiums later depend on income from two years earlier. A year of very low income can be just as wasteful as a year of very high income, because unused low brackets disappear on December 31. See 2026 tax brackets for FIRE.

Health coverage before Medicare

Before Medicare at 65, most early retirees in Florida buy coverage through the ACA Marketplace (HealthCare.gov or the state exchange). Premium tax credits depend on household income, so the same withdrawal choices that drive Florida income tax also drive what you pay for insurance. Price plans for your actual county, since insurer choice and premiums vary a lot between metro and rural areas. If your taxable income will be very low, check Medicaid eligibility rules for Florida too. Our guides to the ACA subsidy cliff and managing MAGI go deeper.

One practical tip: estimate next year's income before open enrollment, then pick withdrawals to land where you planned. Surprises in either direction get reconciled on your federal return, and from 2026 there is no cap on repaying excess advance credits.

Your Florida planning checklist

Use this as a starting list when you are weighing a move or planning withdrawals. Work through it a year before you leave your job, and again each fall before you decide on Roth conversions.

• Confirm the move is real: license, voter registration, Declaration of Domicile, homestead filing.
• Apply for the homestead exemption by the county deadline.
• Get insurance quotes before you sign a contract on a home.
• Check county sales surtax and any senior exemptions.
• Schedule large Roth conversions and gains after residency is established.

Tax rules change every legislative session. Confirm current figures with the Florida revenue department before acting, and treat this page as education, not advice for your situation.