USA – FLORIDA Law and Practice Contributed by: Jennifer Jordan McCall, Drew Reitz and Christine Tsai, Pillsbury Winthrop Shaw Pittman LLP
1. Tax 1.1 Tax Regimes
Florida also imposes a corporate income/franchise tax of 5.5% imposed on all corporations for the privilege of conducting business, deriving income, or existing within Florida. 1.2 Exemptions As previewed in response to 1.1 Tax Regimes , there are exemptions from the federal estate, gift, and GST tax. This means that an individual can transfer prop - erty up to the amount of the exemption, during life or at death, without having to incur these taxes. In 2011, the exemptions were USD5 million, indexed for inflation. In 2017, Congress doubled the exemp - tion amount to USD10 million, indexed for inflation, until 2025. For example, the exemption for 2025 is USD13.99 million for each individual. The increased exemption amount is currently set to sunset at the end of 2025, which means that the exemption will decrease back to the prior USD5 million, indexed for inflation, after 2025, unless a bill is passed to increase the amount. The proposed “One Big Beautiful Bill”, passed by the US House of Representatives on 22 May 2025, in its current form (as the date of the pub - lication) would increase the federal estate and gift tax exemption starting in 2026 to USD15 million. On the state level, Florida imposes property taxes on the ownership of real property (as discussed in 1.2 Exemptions ). However, there are various property tax exemptions, with the most notable being the Florida homestead exemption. To qualify for homestead exemption, a person must, on 1 January of the year, have “legal title or beneficial title in equity to real property” in Florida and must “in good faith make the property his or her permanent residence or the permanent residence of another or others legally or naturally dependent upon him or her”. A permanent residence is the place “where a person has his or her true, fixed, and permanent home and principal establishment to which, whenever absent, he or she has the intention of returning”. A person may have only one permanent residence at a time. If the homestead exemption applies, the assessed value of the real property can be reduced by up to USD50,000 for property tax purposes (with certain adjustments to inflation, starting in 2025). Additionally,
On a federal level, the US generally imposes income taxes, estate taxes, gift taxes, and generation-skip - ping transfer taxes (GST tax) on individuals. The estate tax, which is a tax on the individual’s right to transfer property at death, is imposed on an individual’s gross estate for transfers that exceed the exemption limit. The gift tax, which is a tax on the gratuitous transfer of property made during lifetime, is imposed on the transfer of gifts that exceed the exemption limit. The GST tax applies on the transfer of assets to individuals that are more than one generation below the transferor (if it exceeds the exemption limit). The exemption lim - its for the estate, gift, and generation-skipping transfer taxes are discussed in 1.2 Exemptions . On the state level, Florida does not impose state income taxes, including on investment and retirement income. There are no state estate taxes, which means that the estate will not be subject to any state estate taxes when an individual passes away. Nor are there state inheritance taxes if an individual inherits property from someone else. Florida imposes property taxes on the ownership of real property, based on the assessed value of the property as of 1 January of that year, multiplied by a tax rate (eg, a millage rate) set by local governments. The millage rate is a tax rate defined as the dollars assessed for each USD1,000 of value. Local govern - ments can include the county government, school board, water management districts, special districts and county municipalities. These taxes can be sub - ject to various property tax exemptions, including the Florida homestead exemption (as discussed in 1.2 Exemptions ). Florida has a general sales and use tax of 6%. Excep - tions apply to: 1) retail sales of new mobile homes (3%); 2) amusement machine receipts (4%); 3) rental, lease, or licence of commercial real property (4.5%); and 4) electricity (6.95%). There may be an additional discretionary sales surtax (ie, a county tax) imposed by certain Florida counties which applies to most transactions subject to the sales and use tax.
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