Five Reasons People Retire in Florida

Have you wondered why so many people retire in Florida? It’s not just for the weather.

Word Florida on beach with starfish
(Image credit: Getty Images)

While retiring in Florida isn’t the best choice for everyone, relocating to the Sunshine State has its share of benefits. Of course, some people move to Florida for the warm weather and plentiful beaches, but that’s not all the state offers. 

Florida is one of the most tax-friendly states for retirees, and plenty of out-of-state retirees are noticing. For example, Kiplinger previously reported on migration data showing that Florida gained residents from high-tax states. 

Best places to retire in Florida 

If Florida is already your first choice for retirement, you are not alone. According to a  2022 study, roughly 12% of all retirees who moved out of another state chose Florida as their destination, making it a top choice for retirement relocations in the U.S.

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But you may be wondering where in Florida other retirees are going. Well, the same study found that most new Florida retirees chose the Palm Bay area to call their home. Tallahassee was also a popular retirement spot for new Floridians. 

But regardless of which part of Florida you have your eye on, you are bound to reap some benefits, at least where taxes are concerned.

Florida doesn’t tax retirement income 

Perhaps the biggest reason people choose to retire in Florida is the state’s tax treatment of retirement income. There are plenty of states that don’t tax Social Security benefits, but there aren’t too many states with no income tax at all. 

Florida won’t tax any of your income, regardless of its source. That means you won’t pay state tax in Florida on your 401(k) distributions, investment income, or even your wages, should you choose to go back to work or to unretire.

Florida tax relief 

Florida's average combined state and local sales tax rate of 7.002% isn’t necessarily low compared to other states, but Floridians have more sales tax holidays than any other state in the country. And several items, including baby furniture, are tax-exempt year-round. That could come in handy if you're expecting a visit from young grandchildren.

Additionally, the Sunshine State recently passed a $1.07 billion Florida tax relief package, which includes a one-year tax exemption on residential property and flood insurance policies.

Low property taxes in Florida 

Property taxes in Florida aren’t the lowest in the U.S., but the median average Florida property tax bill of $2,386 is less than in most states, according to US Census Bureau data. And with an average effective property tax rate below 1%, even homes with higher tax valuations may cost you less in property tax than you’re used to. 

Still, not everyone who relocates to Florida will experience lower tax bills, and some will see more savings than others. 

  • If your new Florida home has a significantly higher market value than the home you owned in your previous state, you are less likely to pay less property taxes in Florida.
  • Since home improvements can increase your property’s tax valuation, you may not save much (if any) money on your property tax bill if your new home undergoes extensive renovations.

No Florida taxes on lottery winnings

Florida is one of the states that won’t tax your Mega Millions payout, or any other lottery winnings, for that matter. Depending on how much you win, that could result in savings worth millions of dollars. 

Of course, most people won’t win a lottery jackpot, but if you hope to take home some lottery winnings, state taxes are something to consider. Just don’t forget you’ll still be on the hook for federal taxes. Lottery jackpots, including the Powerball jackpot after taxes, will be much less than the advertised amount.

Why are some retirees leaving Florida?

However, some retirees have been fleeing Florida in recent years. For example, nearly 50,000 Floridians landed in Georgia alone in 2021, according to US Census Bureau data

But if Florida is so great, why are some retirees leaving? Tax breaks are just one factor some people consider when deciding whether to remain in or retire in Florida. 

  • For example, home insurance costs are high in Florida. Kiplinger has reported on insurers restricting coverage in Florida, including AAA and Farmers Insurance, which can make it more difficult for Floridians to find affordable insurance for home and auto.
  • Others are pulled away from Florida due to the extreme heat and rising temperatures. For example, last July was the hottest month on record for Miami, according to data from the University of South Florida.
  • Changes in Florida law and state policies have also caused some Floridians to relocate. A few of Florida's controversial laws include a six-week abortion ban and the Parental Rights in Education bill (often referred to as the "Don't Say Gay bill").

So, before making the move to any state, it’s good to consider all aspects of a new location, so you can make the best decision for yourself and your family.

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Katelyn Washington
Former Tax Writer

Katelyn has more than 6 years of experience working in tax and finance. While she specialized in tax content while working at Kiplinger from 2023 to 2024, Katelyn has also written for digital publications on topics including insurance, retirement, and financial planning and had financial advice commissioned by national print publications. She believes knowledge is the key to success and enjoys providing content that educates and informs.