Estate and Inheritance Tax in Florida
Estate and Inheritance Tax in Florida
Florida does not have a state estate tax, an inheritance tax, or a state income tax. This means that when someone dies in Florida, the state itself takes nothing from the estate or the people who inherit. The only death-related tax that may apply is the federal estate tax, and that only affects estates worth more than $15,000,000.
Florida's Three Tax Advantages
No State Estate Tax
Florida eliminated its state estate tax effective January 1, 2005. The prohibition is written directly into the Florida Constitution under Art. VII, Section 5, which bars the state from levying a tax on the estates of deceased persons.
Before 2005, Florida collected a "pick-up tax" that matched a portion of the federal estate tax credit. When Congress phased out that credit, Florida's estate tax disappeared with it - and the constitutional amendment ensures it cannot return without a voter-approved change.
No Inheritance Tax
Florida has never imposed an inheritance tax. An inheritance tax is different from an estate tax: it taxes the person who receives the inheritance rather than the estate itself.
Only five states currently impose an inheritance tax:
| State | Status |
|---|---|
| Kentucky | Active |
| Maryland | Active (also has estate tax) |
| Nebraska | Active |
| New Jersey | Active (also has estate tax) |
| Pennsylvania | Active |
Iowa repealed its inheritance tax effective January 1, 2025.
If a Florida resident inherits property from someone who died in one of those five states, the inheritance tax from that state may still apply to any property located within that state. But Florida itself will never tax what you inherit.
No State Income Tax
Florida does not tax individual income or estate income (Art. VII, Section 5, Florida Constitution). This means:
- No state income tax return is needed for the deceased's final year
- No state fiduciary income tax return is needed for the estate
- Income earned by the estate during probate (interest, dividends, rent) is not taxed by Florida
Federal Estate Tax: What Still Applies
While Florida takes nothing, the IRS still taxes very large estates at the federal level.
The Exemption
The federal estate tax exemption is $15,000,000 per person, effective July 4, 2025 (P.L. 119-21, One Big Beautiful Bill Act, also known as OBBBA). This means the first $15 million of an estate's value passes free of federal estate tax.
Married couples can shelter up to $30,000,000 through portability. If the first spouse to die does not use their full exemption, the unused portion can transfer to the surviving spouse - but only if a Form 706 is filed for the first spouse's estate to elect portability, even if no tax is owed.
The Rate
Estates that exceed the exemption are taxed at a flat rate of 40% on the amount above $15,000,000.
Example: A single person dies with a taxable estate of $17,000,000.
- Exempt amount: $15,000,000
- Taxable amount: $2,000,000
- Federal estate tax: $2,000,000 x 40% = $800,000
Filing Requirements
| Item | Detail |
|---|---|
| Form | IRS Form 706 (United States Estate Tax Return) |
| Filing threshold | Gross estate exceeds $15,000,000 |
| Deadline | 9 months after date of death |
| Extension | 6-month automatic extension available (file Form 4768) |
| Payment | Tax is due at 9 months even if extension is filed for the return |
Note: Even if the estate is under $15,000,000, you may want to file Form 706 to elect portability of the unused exemption to the surviving spouse.
Income Tax After Death
Final Individual Return (Form 1040)
A final federal income tax return must be filed for the deceased, covering income from January 1 through the date of death. The surviving spouse or Personal Representative files this return.
- Deadline: April 15 of the year following death
- Married couples can file jointly for the year of death
- No Florida state income tax return is needed
Estate Income Tax Return (Form 1041)
If the estate earns $600 or more in gross income during the administration period, the Personal Representative must file Form 1041 (U.S. Income Tax Return for Estates and Trusts).
- Income sources include interest, dividends, rental income, and capital gains from asset sales during administration
- The estate can choose a fiscal year rather than a calendar year
- Again, no Florida state return is required
Step-Up in Basis
One of the most significant tax benefits for heirs is the step-up in basis under IRC Section 1014. When someone dies, the cost basis of their assets is "stepped up" to the fair market value at the date of death.
What this means in practice:
Suppose a parent bought stock for $50,000 that was worth $500,000 at the date of death. If the parent had sold the stock while alive, they would owe capital gains tax on $450,000 of gain. But because the heir receives a stepped-up basis of $500,000, the heir owes zero capital gains tax if they sell immediately at $500,000.
This applies to:
- Stocks, bonds, and mutual funds
- Real estate (including rental property)
- Business interests
- Other capital assets
The step-up in basis is one reason holding appreciated assets until death can be a powerful tax strategy - especially in a state like Florida that adds no income tax on top of the federal treatment.
Homestead and Estate Planning
Florida's homestead protections create unique planning opportunities and restrictions.
Creditor Protection (Art. X, Section 4, Florida Constitution)
The homestead is exempt from forced sale by creditors, with only three exceptions:
- Mortgage debt
- Property tax liens
- Mechanics' and materialmen's liens
There is no dollar cap on this protection. A $5 million home receives the same protection as a $200,000 home. The only limits are size-based:
| Location | Maximum Size |
|---|---|
| Within a municipality | 1/2 acre |
| Outside a municipality | 160 acres |
Devise Restrictions
If the homeowner is survived by a spouse or minor child, the homestead cannot be freely given away by will (Art. X, Section 4(c), Florida Constitution). Instead:
- The surviving spouse can elect either a life estate (with the remainder going to the deceased's descendants) or an undivided 50% interest as tenants in common with the descendants
- This election must be made within 6 months of the decedent's death
- These restrictions override any contrary provision in the will
Lady Bird Deeds
Florida recognizes Lady Bird deeds (enhanced life estate deeds), which allow a property owner to transfer real property to a named beneficiary at death while retaining full control during life. The property avoids probate, and the beneficiary receives a stepped-up basis.
Lady Bird deeds are particularly useful in Florida because the state does not recognize transfer-on-death (TOD) deeds for real property.
Gift Tax Exclusion
The annual federal gift tax exclusion for 2026 is $19,000 per recipient. A married couple can give $38,000 per recipient per year without filing a gift tax return. Gifts above the annual exclusion count against the lifetime exemption ($15,000,000).
Florida does not impose a state gift tax.
Medicaid Estate Recovery
Under Fla. Stat. Section 409.9101, the state can seek to recover Medicaid benefits paid on behalf of a person who was age 55 or older when they received benefits. Recovery is limited to the probate estate.
Key exception: Florida homestead property is exempt from Medicaid estate recovery as long as it qualifies for the constitutional homestead exemption. This is a significant protection for families, as the home is often the largest asset.
This exemption does not apply to non-homestead real property or other probate assets.
Documentary Stamp Tax
While not an estate or inheritance tax, Florida imposes a documentary stamp tax on transfers of real property:
| Location | Rate |
|---|---|
| All counties except Miami-Dade | $0.70 per $100 of consideration |
| Miami-Dade County | $0.60 per $100 of consideration |
This tax applies when real property changes hands - including through estate distributions in some cases. However, transfers to beneficiaries named in a will or intestacy are generally exempt.
Planning Considerations
Given Florida's favorable tax position, estate planning in the state focuses primarily on:
- Federal estate tax minimization for estates approaching or exceeding $15,000,000 (trusts, gifting strategies, charitable planning)
- Homestead planning to ensure the property passes as intended while respecting constitutional restrictions
- Probate avoidance through beneficiary designations, Lady Bird deeds, and revocable trusts
- Income tax planning using the step-up in basis to eliminate capital gains on appreciated assets
- Portability elections to preserve the unused federal exemption for the surviving spouse
Frequently Asked Questions
Does Florida have a death tax?
No. Florida has no estate tax, inheritance tax, or any other form of death tax. The only death-related tax that may apply is the federal estate tax for estates exceeding $15,000,000.
Will my inheritance be taxed in Florida?
No. Florida does not tax inherited money or property. If the deceased lived in a state that has an inheritance tax (Kentucky, Maryland, Nebraska, New Jersey, or Pennsylvania), that state's tax may apply to property located there, but Florida itself imposes nothing.
What is the federal estate tax exemption for 2026?
The federal estate tax exemption is $15,000,000 per person (P.L. 119-21, OBBBA, signed July 4, 2025). Married couples can shelter $30,000,000 through portability.
Do I need to file a Florida estate tax return?
No. Florida does not have a state estate tax and therefore has no state estate tax return. You may need to file a federal Form 706 if the estate exceeds $15,000,000 or to elect portability.
How does the step-up in basis work?
When someone dies, the cost basis of their assets resets to the fair market value at the date of death (IRC Section 1014). This eliminates any unrealized capital gains that built up during the deceased's lifetime. Heirs who sell inherited assets at or near the date-of-death value owe little or no capital gains tax.
What to Do Next
Florida's lack of state-level death taxes is a major advantage, but federal obligations still require attention for larger estates, and homestead rules create planning constraints that affect every Florida family.
For the full picture of what to handle after a death, see what to do when someone dies in Florida. For details on the probate process, see how probate works in Florida.
Kaira organizes every step for your state — deadlines, forms, and next actions — so nothing gets missed. See how it works.
Disclaimer: This article is for informational purposes only and does not constitute legal, tax, or financial advice. Tax laws change frequently, and individual circumstances vary. Consult a licensed tax professional or Florida attorney for advice specific to your situation.
Sources: Art. VII, Section 5, Florida Constitution; Art. X, Section 4, Florida Constitution; IRC Section 1014; IRS Publication 559; P.L. 119-21 (One Big Beautiful Bill Act, 2025); Fla. Stat. Section 409.9101.