5 Reasons People Retire in Florida

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

Beach chairs on white sand in Florida
(Image credit: Getty)

While choosing to retire in Florida isn’t the best choice for everyone, relocating to the Sunshine State comes with 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 has to offer. 

Florida happens to be one of the most tax-friendly states for retirees, and plenty of out-of-state retirees are taking notice. For example, Kiplinger previously reported on migration data showing that Florida gained residents from high-tax states. (Between 2020 and 2021, more than 84,000 new Florida residents came from New York alone.) 

Best places to retire in Florida 

If Florida is already your first choice for retirement, you’re 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 the majority of 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 sales tax breaks 

Florida's average combined state and local sales tax rate of 7.02% isn’t necessarily low compared to other states, but it’s not one of the highest either. And Floridians have more sales tax holidays than any other state in the country. Many of these tax holidays were recently expanded due to a $1.3 billion Florida tax relief bill

The tax relief package also made several children’s products permanently tax-exempt, so you may save some money if, for example, you want to spoil the grandchildren when they come to visit. Here are just a few of the things you can buy-tax free.

  • Baby and toddler clothing and footwear are tax-exempt.
  • Baby equipment (such as strollers and changing tables are tax-exempt).
  • Baby safety gates and play yards are tax-free.

You can also purchase tickets to events, such as concerts in Florida, without paying sales tax, until September 4, 2023.

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 $2,143 is less than in most states, according to PropertyShark. 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 Mega Millions (and other lottery winnings) 

By now, you may have heard that a ticket in Florida matched all six numbers to win the record-high, August 8 $1.58 billion Mega Millions jackpot. But the winner won’t pay state taxes on the payout. That’s because 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 Mega Millions payout after taxes, will always be much less than the advertised amount.

Why are some retirees leaving Florida?

You may also have heard, however, that some retirees have been fleeing Florida. 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, July 2023 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. For example, former Miami Heat basketball player Dwyane Wade, who spent 16 years playing for the Florida-based team, recently left the state with his family due to legislation and restrictive policies regarding the LGBTQIA+ community.

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.

Katelyn Washington
Tax Writer

Katelyn has more than 6 years’ experience working in tax and finance. While she specializes in tax content, Katelyn has also written for digital publications on topics including insurance, retirement and financial planning and has had financial advice commissioned by national print publications. She believes that knowledge is the key to success and enjoys helping others reach their goals by providing content that educates and informs.