Income tax, what advantages does it have in Florida?

The tax burden in Florida is a global trend due to the absence of income tax. If your desire is to invest in Florida and you want to understand well how the tax burden works, this article is for you

In addition to income tax, what other taxes are paid in the United States?

According to CNN (2022), in the United States the more you earn, the more you pay. Specifically, income tax does not apply to the entire country. The United States is a federal nation, meaning that each state has autonomy in certain policy areas. The tax burden is one of them.

Not all states charge income tax. Those who do charge, calculate it based on personal characteristics such as: marital status, income level, family role, among others.

According to the consulting firm KPMG (n.d.), in the United States no national taxes are paid, rather each state has the power to decide whether to charge or not. However, sometimes you will find indirect taxes such as: property, consumption, telecommunications, etc. According to the consultancy, the tax range can vary quite a bit from state to state, from 2.9% to 7.25%.

What about income tax in Florida?

The case of Florida and 8 other states that do not charge this tax is interesting. These types of states are flexible with the tax burden because they seek to attract investment, knowledge and talent. This in the long run generates economic growth.

Additionally, according to the tax technology company Lovat (n.d.), Florida compensates the collection with a standard sales tax of 6%. However, there is a range of tax-free products, as well as deductions for prompt payment or online payments.

Having a pocket-friendly state brings some advantages worth mentioning.

What advantages does this bring?

There is more room to invest in properties

With more money available in your pocket, you can give space to the jewel in Florida’s crown: real estate investments.

Historically, these investments have provided returns. In addition, the labor market will continue to grow above the national average, according to the Institute of Economic Forecasting at the University of Central Florida (2021). That means more demand for housing and better valuations.

Reside in an example state and with higher income

Florida is a state open to the world. It is multicultural and has dozens of places to know and visit. This state has lately opened the door to migrants looking to improve their lifestyle. With the tax efforts made with the income tax, living here doesn’t seem like such a bad idea.

Greater purchasing power

Although inflation rose throughout the country, the last few months have been normalizing. In any case, the investment offer in Florida is ample, which will help you fight inflation. With inflation controlled, money invested and a low tax burden, their purchasing power increases.

Greater financial freedom

Financial freedom is understood as the fact of not depending on the salary. You won’t depend on your salary when your investment returns pay the bills. This is known as passive income.

It may take some time, but achieving financial freedom in Florida can be easier than in other countries. In fact, that’s the message federal authorities are giving by not charging an income tax. By not charging, what they are looking for is for people to invest more and for the economy to grow.

What additional taxes should be taken into account?

There is currently a sales tax. In the US it is called VAT, in Latin America its equivalent is VAT. This tax, while falling on the seller, also alters the price of the product. Also, just as there are non-taxed products such as diapers or software, there are taxed products such as gasoline, alcohol, etc.

In conclusion, the payment of taxes varies not only from state to state but from person to person. The main thing is to analyze your specific case in detail in search of possible deductions.

At PFS Realty we understand income tax, the local market and can help you meet your investment goals. If your desire is to know more about taxes in Florida, seek financing or want information to invest in real estate, do not hesitate to contact us.

References

CNN en Español (2022). IRS Tax Schedule 2022: How Much Do I Have to Pay Based on Income and My Marital Status? https://cnnespanol.cnn.com/2022/03/16/tabla-impuestos-irs-2022-cuanto-tengo-pagar-ingresos-renta-estado-civil-orix/#:~:text=El%20sistema%20tributario%20de%20Estados,%25%2C%2012%25%2C%2022%25

Institute of Economic Forecasting at the University of Central Florida (2021). Job growth in Florida will outpace the national economy in 2022. Action 97.9. https://accion979.iheart.com/featured/accion-en-la-manana/content/2021-12-26-crecimiento-del-empleo-en-florida-superar-a-la-economa-nacional-en-2022/

KPMG (n.d.). United States – Indirect Tax Guide. https://home.kpmg/xx/en/home/insights/2018/10/united-states-indirect-tax-guide.html#:~:text=There%20is%20no 20national 20sales,from 201 20to%205%%20national%%201%.

LOVAT (n.d.). Florida sales tax guide. Vat compliance. https://vatcompliance.co/es/states/ventas-impuestos-florida/