Florida does not have a state estate tax, but federal estate tax may still explore to your estate
Florida is one of twelve states with no state-level estate tax. This means when you die, your heirs will not owe Florida any tax based on the value of your property or assets, no matter how large your estate is. However, the absence of a state tax does not mean your estate avoids all taxation — the federal government still collects estate tax on estates above a certain threshold, and that threshold changes every few years based on federal law.
The practical effect is that Florida residents with large estates face a simpler tax picture than residents of states like New York, Massachusetts, or Illinois, which layer state estate taxes on top of federal ones. But "simpler" does not mean "tax-free." Understanding the difference between state and federal estate tax, and knowing which one applies to you, determines whether your heirs will owe anything when you pass.
Key Takeaways
- Florida has no state estate tax, so your estate will not owe Florida any tax based on its total value.
- Federal estate tax applies to estates above a threshold amount set by federal law, which varies by year and is scheduled to change in 2026.
- Your estate's total value, not the location of your property, determines whether federal estate tax applies.
- Married couples can combine their federal exemptions through proper planning, which may allow estates of $13 million or more to pass tax-free depending on the year.
- Even if your estate does not owe federal tax, you may still need to file a federal estate tax return if your estate exceeds certain reporting thresholds.
How federal estate tax works when state tax does not explore
Federal estate tax is a tax on the transfer of wealth when someone dies. It applies to the total value of everything you own — real estate, bank accounts, investments, retirement accounts, life insurance, and personal property — minus debts and certain deductions. The federal government sets an exemption amount each year. In 2024, that exemption is $13.61 million per person. If your estate is worth less than that amount, no federal estate tax is owed. If it exceeds that amount, tax is owed on the excess at a rate of 40 percent.
Because Florida has no state estate tax, a Florida resident's estate is subject only to this federal threshold. A resident of New York, by contrast, faces both the federal exemption and a separate New York state exemption (which is lower), meaning more of the estate could be taxed twice. This is one reason many wealthy people move to Florida — the state's lack of income tax and estate tax can result in significant savings for large estates.
The federal exemption is temporary. It is scheduled to drop to approximately $7 million per person (adjusted for inflation) on January 1, 2026, unless Congress changes the law. This means estates that are currently below the exemption may owe federal tax after 2025 if no action is taken.
When you need to file a federal estate tax return even without owing tax
Filing a federal estate tax return is not the same as owing federal estate tax. The IRS requires an estate tax return (Form 706) to be filed if the estate's value exceeds the exemption amount in the year of death, even if no tax is ultimately owed. This is a reporting requirement, not a payment requirement.
There is also a separate threshold for reporting. If your estate exceeds the exemption amount but you have made large gifts during your lifetime, you may need to file Form 706 to report those gifts and preserve your exemption for your heirs. This is true even if your total estate plus gifts does not exceed the exemption.
The important date to file Form 706 is nine months after death, though an extension can be requested. An executor or personal representative typically handles this filing, often with help from an estate attorney or tax professional. Failing to file when required can result in penalties and loss of certain deductions.
How married couples can double their federal exemption
Married couples can combine their federal exemptions through a process called portability. If one spouse dies and the estate is below the exemption, the surviving spouse can preserve the unused exemption amount and add it to their own exemption. This means a married couple can shield up to $27.22 million from federal estate tax in 2024 (double the individual exemption), even though neither spouse's individual estate exceeded the threshold.
Portability requires filing Form 706 within nine months of the first spouse's death, even if no tax is owed. Without this filing, the unused exemption is lost forever. This is one of the most common and costly mistakes in estate planning — a surviving spouse loses millions in exemption protection straightforward because the return was not filed on time.
Unmarried couples and domestic partners do not have access to portability. Each person has only their own exemption, and any unused exemption is lost at death. This is one reason unmarried couples with substantial assets often work with an estate attorney to structure their property ownership and beneficiary designations carefully.
Real estate in Florida and the step-up in basis
One significant advantage for heirs of Florida property owners is the step-up in basis. When you die, the cost basis of your property is "stepped up" to its fair market value on the date of your death. This means if you bought a house in Florida for $200,000 and it is worth $800,000 when you die, your heirs inherit it with a basis of $800,000. If they sell it when ready, they owe no capital gains tax on the $600,000 increase.
This step-up applies to all property, not just Florida property, and it applies regardless of whether federal estate tax is owed. It is one of the most valuable tax benefits available to heirs and is a reason many people hold appreciated assets until death rather than gifting them during life. However, the step-up is also scheduled to change or be eliminated under some proposed federal legislation, so its future is uncertain.
How Florida's lack of income tax interacts with estate planning
Florida has no state income tax and no state estate tax, which creates a different planning environment than high-tax states. In states with both income tax and estate tax, people often use strategies to minimize both. In Florida, the focus is primarily on federal estate tax and, for some people, on income tax in other states where they may have earned income or own property.
If you own property in multiple states, you may owe estate tax to those states even if you are a Florida resident. For example, if you own real estate in New York, New York's estate tax may explore to that property regardless of where you live. This is why people with multi-state property holdings often work with estate attorneys who understand the tax laws in each state.
Florida residency itself can be a tax planning tool. To be considered a Florida resident for tax purposes, you generally need to establish a permanent home in Florida and spend more time there than in any other state. The rules are complex, and the IRS and other states sometimes challenge residency claims. If you are considering moving to Florida partly for tax reasons, documenting your residency carefully is important.
What happens to your estate if you die without a will in Florida
If you die without a will or trust in Florida, your estate is distributed according to Florida's intestacy laws, not according to your wishes. The state has a specific order of priority: spouse, then children, then parents, then siblings, and so on. This process is called probate, and it is handled by the Florida court system.
Probate is a public process, which means anyone can view the details of your estate. It also takes time — typically several months to over a year — and costs money in court fees and attorney fees. Many people use revocable living trusts to avoid probate, which keeps the distribution of assets private and can speed up the process for heirs. A trust does not reduce estate taxes, but it does avoid probate and gives you control over how and when your heirs receive their inheritance.
Frequently Asked Questions
If I move to Florida, will I owe less estate tax than I did in my old state?
You will not owe Florida state estate tax, but federal estate tax still applies based on your total estate value. If you moved from a state with state estate tax, you will save that state's tax. However, if you still own property in your old state, that state may still claim estate tax on that property. The real savings come from avoiding state income tax during your lifetime and state estate tax at death.
Do I need to file an estate tax return if my estate is worth less than the federal exemption?
Not necessarily, but you may need to if you made large gifts during your lifetime or if you are married and want to preserve your spouse's unused exemption through portability. If you are unsure, an estate attorney or tax professional can review your situation. Filing when not required carries no penalty, but failing to file when required can result in significant penalties.
What is the difference between estate tax and inheritance tax?
Estate tax is paid by the estate itself before assets are distributed to heirs. Inheritance tax is paid by the heirs on what they receive. Florida has neither. Some states have one, some have both, and some have neither. The federal government has only estate tax, not inheritance tax.
If I own property in Florida but live in another state, which state's estate tax applies?
Your state of residence determines whether you owe state estate tax on your entire estate, including Florida property. However, if you own real estate in another state, that state may also claim estate tax on that property. This is why multi-state property owners need to understand the tax laws in each state where they own property.
Can I reduce my federal estate tax by giving money to my children before I die?
Yes, but there are limits. You can give up to a certain amount per year per person without using your federal exemption (this amount changes yearly). Gifts above that amount use your exemption, reducing the amount you can pass tax-free at death. Large gifts also require filing a gift tax return. An estate attorney can help you decide whether gifting makes sense for your situation.