Florida Income Tax Guide: Managing Taxes in a No-Income-Tax State

A state’s income tax system influences take-home pay, employer costs, and overall compliance. Even in states without personal income tax, workers, employers, and payroll managers must understand how other taxes shape payroll and employer responsibilities.

Florida stands out as one of the few states that do not tax individual income. This increases residents’ take-home pay and simplifies payroll for employers.

Still, businesses must meet other state requirements, such as paying reemployment tax.

This guide explains how Florida’s no-income-tax structure affects payroll, compliance, and employer responsibilities. You’ll learn how payroll automation through tools like Deel US Payroll simplifies multi-state compliance.

How income tax works in Florida

The Florida Department of Revenue (DOR) administers and enforces all Florida state tax laws.

Florida does not tax individual wages, salaries, or other personal income such as dividends or capital gains. Residents who live and work in the state pay only federal income tax.

However, businesses are not exempt. Florida imposes a corporate income and franchise tax on C-corporations and on limited liability companies (LLCs) taxed as corporations for federal purposes.

Corporate taxable income begins with federal taxable income, then adjusted to account for Florida-specific additions or subtractions that differ from federal rules.

For employers, operating in a no-income-tax state simplifies payroll. There’s no need to register for state income tax withholding or file state returns for employees who work entirely in Florida.

Even so, employers must still handle federal income tax withholding.

See also: Understanding Florida Labor and Employment Laws in Florida

Residency rules and filing status in Florida

Florida determines residency for tax purposes based on an individual’s overall circumstances. It mainly depends on domicile, intent, and time spent in the state.

An individual is generally considered a Florida resident if they:

• Have their permanent home and primary place of living in Florida
• File a Declaration of Domicile
• Register to vote in Florida or obtain a Florida driver’s license
• Spend most of their time in Florida and maintain key personal and financial ties there

Residency in Florida affects state-level benefits like the homestead exemption or voter registration. It also determines certain legal requirements, including vehicle registration taxes. However, it does not create any state income tax obligation.

Because Florida does not levy a personal income tax, it does not recognize state filing statuses like single, married filing jointly, or married filing separately.

In comparison, spending time in states like Georgia can trigger income tax obligations as a nonresident or part-year resident. In those states, filing status such as single or married filing jointly determines which tax brackets apply.

See also: What Are Florida’s Maternity Leave Laws in 2025?

Florida income tax rates and brackets

Florida has no personal income tax, so individuals are not subject to state income tax brackets. Only corporations and LLCs taxed as corporations pay the state’s corporate income tax.

Although Florida has no personal income tax, other state and local taxes still apply to both individuals and employers:

• Sales tax: A 6% tax on most retail sales and certain services sold within the state. Surtaxes from local counties can raise the total Florida sales tax rate to about 7.5% in some areas
• Use tax: Applies when sales tax was not collected on goods purchased outside Florida but used or consumed in the state. The rate matches the combined state and local sales tax
• Property taxes: Levied by counties, municipalities, and school districts based on the assessed value of real estate and tangible personal property. Rates vary by location
• Reemployment tax: Paid by employers at rates between 0.1% and 5.4% on the first $7,000 of each employee’s annual wages. It funds Florida’s unemployment benefits program

Florida income tax deductions and credits

Florida residents do not file state income tax returns, so there are no personal deductions or credits at the state level.

However, businesses that file corporate income tax returns may make specific adjustments to federal taxable income under Florida law. These adjustments account for differences between federal and state treatment of income, deductions, and expenses.

• Annual deduction limit: Florida exempts the lesser of $50,000 or the Florida portion of the corporation's adjusted federal income
• Depreciation differences: Florida limits federal bonus depreciation. Companies must add it back, then spread the deduction over seven years
• Foreign-source dividends: Dividends from foreign sources are deducted and related expenses are added back
• Non-business income: Subtracted when calculating Florida's adjusted federal income
• State and local taxes (SALT): Taxes paid to or accrued for another state or local jurisdiction must be added back

Florida also offers a range of credits, refunds, and incentives for qualifying businesses. Eligible businesses may include those that:

• Operate in high-impact sectors such as life sciences, or in areas like commercial hazardous waste recycling
• Provide child care facilities to employees
• Make qualified community contributions
• Participate in brownfield redevelopment
• Contribute to the Florida Housing Finance Corporation
• Conduct qualified research and development
• Support approved nonprofit scholarship-funding organizations
• Hire employees with physical or intellectual impairments

Florida’s lack of a personal income tax simplifies payroll for employers, removing the need to withhold or file state income tax for employees. However, this does not remove federal responsibilities. Employers must still withhold federal income tax, pay FICA contributions, and file federal unemployment tax (FUTA).

Filing and payment details

Individual taxpayers in Florida do not need to file a Florida income tax return. However, businesses must file the Florida Corporate Income/Franchise Tax Return (Form F-1120) through the Florida Department of Revenue’s online portal, even if they earned no income.

Florida uses two criteria to determine the filing deadline for Form F-1120: one based on the company’s tax year and another based on the federal return. The due date is the latter of the two.

• Based on tax year:
  • For tax years ending June 30: November 1 (for tax years beginning after January 2026)
  • For tax years ending December 31: May 1
  • Any other tax year endings: The first day of the fifth month after the tax year ends
• Based on the federal return: The 15th day after the unextended due date for the related federal corporate return for the same tax year

Penalties for late filing and payment in Florida

If the return is late, a 10% penalty applies to any unpaid tax for each month or part of a month it remains unpaid, up to a maximum of 50%.

If no tax is owed but the return is late, the penalty is $50 per month (or part of a month), up to $300.

Florida’s estimated tax payments

Companies that owe more than $2,500 in corporate income tax must pay estimated taxes using Form F-1120ES. For tax years beginning on or after January 1, 2026, due dates are:

• Tax year ending June 30th: On or before November 30, December 31, March 31, and June 30
• For calendar-year filers: On or before May 31, June 30, September 30, and December 31
• All other tax year endings: On or before the last day of the 5th, 6th, 9th, and 12th months of the tax year

Employer payroll obligations in Florida

As an employer in Florida, you only need to withhold federal income tax, social security, Medicare, and FUTA. You must also pay reemployment tax, which cannot be withheld from employees’ wages.

The initial reemployment tax rate for new employers is 2.7%, applied to the first $7,000 of each employee’s annual wages.

This rate stays at 2.7% until the employer has reported for 10 quarters. After that period, the rate is recalculated each year based on the employer’s benefit ratio and the balance of the state’s trust fund. For 2025, the tax rate ranges from 0.1% to 5.4%.

To remit reemployment tax, you should submit an Employer's Quarterly Report (Form RT-6) by the last day of the month following each quarter, even if you had no employees or wages during that period.

The Florida Department of Revenue's eServices system is the main platform for registration, payments, and filings. If you have refund requests, you can check their status using the Refunds tool.

See also: Step-by-Step Guide to the US Payroll Process

What employers and workers should know about Florida income tax

For employers, Florida’s tax structure means fewer withholding, reporting, and filing requirements. This reduces payroll complexity and administrative costs.

For workers, they get to keep a larger share of their earnings. This can make Florida-based salaries more competitive, even if nominal pay rates are lower than in states like California.

How to handle multi-state employment

If your company is based outside Florida but employs remote workers in the state, their income is considered Florida-source income. You only need to withhold federal taxes.

When a worker moves to Florida mid-year, they are no longer subject to their previous state’s income tax. You must begin remitting reemployment tax once the company starts paying wages for work performed in Florida.

If the worker later moves out of Florida, the new state will impose income tax starting from the date they begin working there. You must register for state withholding in that state and stop paying Florida reemployment tax.

In both cases, update the employee’s state of residence, work location, and tax setup in your payroll system. Adjust state income tax withholding from the move date onward.

It’s also important to keep documentation of the move and payroll changes to support compliance during audits or reconciliations.

Managing these multi-state payroll compliance steps is much easier with a centralized payroll system. Deel US Payroll automatically updates state registrations and applies the correct withholding and tax rates when employees relocate.

It helps you stay compliant by managing reemployment tax filings for Florida-based workers and ensuring all federal and state obligations are met across jurisdictions.

Employees also receive accurate, itemized pay stubs through a self-serve dashboard, reducing administrative workload for payroll teams.

See also: A Guide to PEO in Florida

How to communicate payroll differences and budget implications

When you have employees working from different states, such as no-income-tax states like Florida and high-tax states like New York, clarify that gross pay remains consistent, but net pay differs due to state tax laws. This transparency helps maintain trust and prevents confusion about pay equity.

Show how state taxes, benefits, and deductions affect take-home pay. A simple before-and-after example using Deel’s Take-Home Pay Calculator can help employees visualize these differences.

Encourage employees to plan their budgets around their location. For example, Florida employees can take advantage of the state’s no-income-tax policy by redirecting more of their take-home pay toward savings or other financial goals.

Simplify payroll management in Florida with Deel

Florida’s lack of personal income tax leaves employers responsible only for federal withholdings. It makes payroll management much simpler.

The main tax responsibilities fall on businesses, including reemployment tax, sales and use tax, and corporate income tax. Always verify current requirements through official sources such as the Florida DOR and the IRS to stay fully compliant with all tax and reporting rules.

Deel US Payroll helps you maintain payroll accuracy and compliance across all 50 states, including no-tax states like Florida. It centralizes multi-state payroll operations, provides clear gross-to-net calculations, and monitors compliance in real time.

You also gain access to US tax experts, detailed state-level payroll reports, and automation tools that reduce manual work.

Explore how Deel’s US Payroll can simplify compliance and payroll management nationwide. Book a demo today.