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Are Florida Taxes Low? It Depends on Your Income Level.

Florida has a reputation as a low-tax state, thanks to its lack of a personal income tax, but top earners get bigger breaks than low-income individuals.

A family on the beach in Bean Point on the northern tip of Anna Maria Island in Florida.
The scene at the beach on Anna Maria Island, Fla. Manatee County is considering a 1 percent increase in the bed tax it charges visitors.
Tiffany Tompkins/TNS
In Brief:
  • Florida's top earners receive breaks under the state tax code, which collects larger shares from low-income individuals.

  • The bottom 20 percent in Florida pay a higher share of their income than the top 1 percent in California, according to a new report.

  • Although blue states such as California have much higher tax rates, their use of tax credits helps ease the burden for those who earn less.

  • It’s been almost a hundred years since Florida eliminated its personal income tax. Not taxing income contributes to its reputation as a low-tax state and is part of the draw for retirees. But of course Floridians do pay taxes and the state’s system leads to some inequities, according to a new report from a progressive organization.

    In Florida, the top 1 percent of earners get the biggest benefit from the tax code and pay relatively low taxes as a result. Florida’s tax code ranks as the most regressive in the country over states such as Texas, Nevada, and Pennsylvania. The lowest 20 percent of earners in the state pay more than 13 percent of their income in state and local taxes. The top 20 percent, by contrast, pay about 5 percent of their incomes on average — with the top 1 percent paying half that share in state and local taxes.

    Compare that to California, a state that has a long-held reputation as a high-tax state. Last year, 7 out of 10 Californians believed they were overtaxed. News outlets have run many stories about how the state’s high income tax rate has caused some of its wealthiest residents to leave. But in “Is California Really a High-Tax State?,” the Institute on Taxation and Economic Policy makes the argument that overall tax rates are fairer in California than Florida. Florida’s bottom earners pay a greater share of their income in taxes than Californians in the top 1 percent.

    “In states like California, very few Californians are going to pay their top rate because most Californians do not make millions of dollars a year,” says Eli Byerly-Duke, a state policy analyst at ITEP and co-author of the report. “People conflate the top rate with what typical people will pay.”

    It’s certainly true that California has some of the highest tax rates in the country, but the way those rates are applied mean that its tax code is one of the most progressive in the nation. “We’re one of the states where the top 1 percent does pay more of their income to taxes than other groups,” says Kayla Kitson, senior policy analyst at California Budget and Policy Center.

    The Value of Tax Credits

    California helps lessen the burden on lower-income earners through tax credits. Although not all tax credits are aimed at lower-income individuals — some benefit corporations — there are enough to “automatically make the tax system more progressive, or less regressive,” Kitson says.

    There are 31 states that offer earned-income tax credits, while 15 offer credits for dependent children. Florida currently offers neither. However, the liberal Florida Policy Institute has recommended that the state implement a Working Floridians Tax Rebate, a proposal that’s been kicking around since 2019.

    It would offer a tax credit to provide eligible Floridians with an average rebate of over $500 a year. This earned-income credit would be similar to Washington state’s Working Families Tax Credit. A year after its implementation, that credit added an additional $116 million to the state’s economy.

    “While the WFTR program would not be the first credit or rebate program in Florida,” says Esteban Leonardo Santis, a budget analyst at the Florida Policy Institute, “if passed, it would be the largest and most targeted, helping over 2 million households earning low to moderate income in the state.”
    Zina Hutton is a staff writer for Governing. She has been a freelance culture writer, researcher and copywriter since 2015. In 2021, she started writing for Teen Vogue. Now, at Governing, Zina focuses on state and local finance, workforce, education and management and administration news.
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