Florida does not impose a personal income tax on its residents, and the state constitution prohibits one from being enacted without a constitutional amendment approved by at least 60 percent of voters. That prohibition has been in place since 1924 and was reinforced by a 2018 amendment that requires a two-thirds legislative supermajority to impose any new state taxes or fees. For Miami residents, the absence of a state income tax creates real savings compared to peers in New York, California, or Illinois — but it does not mean Florida is a low-tax state. The money comes from somewhere, and understanding where reveals a tax structure that hits consumption, property ownership, and real estate transactions harder than most newcomers expect.
How Does Florida Fund Its Government Without Income Tax Revenue?
Florida’s general revenue depends heavily on its 6 percent state sales and use tax, which accounts for roughly three-quarters of the state’s general revenue collections. Counties can add a discretionary surtax of up to 2.5 percent on top of the state rate, and Miami-Dade County levies a 1 percent surtax, bringing the combined sales tax rate to 7 percent on most taxable purchases within the county. Broward County, immediately to the north, charges no county surtax, meaning identical purchases cost less in sales tax just across the county line.
Florida exempts most unprepared groceries and prescription medications from sales tax, but the tax applies broadly to tangible personal property, certain services, commercial leases, and digital goods. The state also collects a 9 percent commercial lease tax, one of the few states that taxes business rent, which directly affects the operating costs of every storefront, office, and warehouse in Miami.
Beyond sales tax, Florida generates revenue through a documentary stamp tax on real estate transactions, a corporate income tax of 5.5 percent on business net income, tourism development taxes on short-term lodging, and excise taxes on fuel, tobacco, and alcohol. The documentary stamp tax applies to deeds at a rate of $0.60 per $100 of consideration in Miami-Dade County (compared to $0.70 per $100 in most other Florida counties), plus $0.35 per $100 on new mortgages and an additional intangible tax of $0.20 per $100 on mortgage amounts. On a $600,000 home purchase with a $480,000 mortgage, closing costs related to documentary stamp and intangible taxes alone total approximately $5,280.
What Does Property Tax Look Like In Miami-Dade?
Property taxes represent the largest recurring tax expense for most Miami homeowners. Miami-Dade’s combined millage rates — which include county, city, school district, and special district levies — typically range from 18 to 21 mills depending on the municipality, translating to effective rates of roughly 1.8 to 2.1 percent of assessed value before exemptions.
Florida’s homestead exemption provides the primary form of property tax relief for owner-occupied residences. The exemption works in two layers: the first $25,000 reduces taxable value for all property taxes including school district levies, and an additional amount (currently $26,411 for 2026, adjusted annually for inflation under a 2024 voter-approved amendment) applies to the assessed value between $50,000 and $75,000 for non-school taxes only. For homeowners in a typical Miami-Dade municipality, the combined exemption produces roughly $750 to $1,100 in annual property tax savings.
The Save Our Homes provision, enshrined in the Florida Constitution, caps annual increases in a homesteaded property’s assessed value at 3 percent or the change in the Consumer Price Index, whichever is lower. In a market like Miami, where home values have risen dramatically over the past decade, this cap can produce a significant gap between a property’s market value and its assessed value over time. Long-term homeowners in neighborhoods like Coral Gables or Coconut Grove may carry assessed values hundreds of thousands of dollars below their home’s actual market worth.
| Tax Type | Rate / Amount | Applies To |
|---|---|---|
| State income tax | None | Constitutionally prohibited |
| Sales tax (Miami-Dade) | 7% | 6% state + 1% county surtax |
| Property tax (Miami-Dade) | ~18–21 mills | Varies by municipality and district |
| Documentary stamp tax | $0.60 per $100 | Real estate deed transfers in Miami-Dade |
| Corporate income tax | 5.5% | Business net income (C-corps) |
When a homesteaded property is sold, the buyer’s assessed value resets to the current purchase price — the accumulated Save Our Homes cap benefit does not transfer to the new owner. Homeowners who sell one Florida property and purchase another can port up to $500,000 in accumulated Save Our Homes savings to their new home, but that benefit applies only within Florida.
What Do Business Owners Need To Know About Tangible Personal Property Tax?
Miami-Dade business owners face an additional tax layer that residential property owners do not: the tangible personal property tax. This annual tax applies to business equipment, furniture, fixtures, and other non-real-estate assets used in a commercial operation. Business owners must file a Tangible Personal Property Tax Return by April 1 each year, declaring the value of all qualifying assets. A $25,000 exemption applies, meaning businesses with less than $25,000 in total tangible personal property value owe nothing. For businesses above that threshold, the tax rate mirrors the local millage rate applied to real property.
How Does Miami’s Tax Picture Compare To Other Major Cities?
The comparison depends entirely on income level and property ownership. A Miami resident earning $500,000 per year saves roughly $50,000 to $55,000 annually in state and local income taxes compared to a New York City resident at the same income, who owes both New York State income tax and a separate city income tax. At lower income levels, the savings shrink, and Miami’s higher property insurance costs, sales tax burden, and windstorm premiums can narrow the gap further.
Florida’s no-income-tax framework delivers genuine and measurable savings for high-earning residents and retirees with substantial portfolio income, but the state’s reliance on consumption and property-based revenue means Miami residents fund public services through every purchase, every property tax bill, and every real estate closing rather than through a single deduction from their paychecks.
