Florida Capital Gains Tax: A Complete Guide
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Florida residents enjoy a major perk: no state-level capital gains tax, thanks to the state’s lack of personal income tax. This creates a uniquely favorable tax environment. However, residents must still navigate federal capital gains tax rules and leverage exemptions and strategies at the federal level to manage their tax obligations effectively.
Florida’s Tax Environment for Capital Gains
Florida does not tax individuals on income or capital gains. This is because the state has no personal income tax, which applies to both wages and investment income1.
This makes Florida one of the few states, alongside Alaska, Nevada, Texas, Tennessee, Wyoming, South Dakota, and New Hampshire, that do not impose capital gains or income taxes1.
Federal Capital Gains Tax Overview
Capital gains tax refers to the tax on profits from selling assets, such as stocks, real estate, or collectibles. If held for one year or less, these are short-term gains and taxed at your ordinary income tax rate.
On the other hand, long-term capital gains (assets held over one year) benefit from preferential rates of 0%, 15%, or 20%, depending on total taxable income2.
2025 Long-Term Capital Gains Tax Brackets:
Filing Status | 0% Rate (Max Income) | 15% Range | 20% (Above) |
Single | Up to $48,350 | $48,351 – $533,400 | Over $533,400 |
Married Filing Jointly | Up to $96,700 | $96,701 – $600,050 | Over $600,050 |
Married Filing Separately | Up to $48,350 | $48,351 – $300,000 | Over $300,000 |
Head of Household | Up to $64,750 | $64,751 – $566,700 | Over $566,700 |
Additional Federal Taxes and Special Rates
Certain assets face higher federal tax rates, including:
- Collectibles (e.g., art, coins): up to 28%
- Qualified small-business stock: up to 28%
- Unrecaptured Section 1250 gains (from depreciable real estate): taxed up to 25%3
Additionally, high earners may face the Net Investment Income Tax (NIIT), an extra 3.8% tax on investment income if Modified Adjusted Gross Income (MAGI) exceeds specific thresholds4:
- Single or Head of Household: $200,000
- Married Filing Jointly: $250,000
- Married Filing Separately: $125,000
Primary Residence Exclusion Rules
At the federal level, if you sell your primary residence, you may exclude up to:
- $250,000 of capital gain (single filers)
- $500,000 of capital gain (married filing jointly)
Conditions apply: you must have owned and lived in the home for at least two of the last five years before the sale.
How Florida’s Tax Policy Impacts Real Estate Gains
Selling real estate in Florida—whether it’s your primary home, vacation property, or investment real estate—means you’ll owe only federal capital gains taxes. Florida imposes no additional state capital gains or income tax on such sales.
Strategies for Minimizing Federal Capital Gains Tax
- Hold assets long-term to qualify for preferential rates.
- Tax-loss harvesting: Offset gains by selling underperforming investments.
- Sell during lower-income years to potentially stay in lower capital gains brackets.
- For investment real estate, consider 1031 exchanges to defer gains by reinvesting in like-kind property.
Comparison with Other States
Florida stands out alongside states like Alaska, Nevada, Texas, Wyoming, etc., that levy no state capital gains tax. This offers a clear advantage over high-tax states such as California or New York, which tax gains at the same rates as regular income.
When to Consult a Tax Professional
Professional advice is invaluable when:
- Handling a large or complex investment portfolio
- Structuring significant real estate transactions
- Navigating NIIT thresholds
- Claiming the primary residence exclusion
- Tackling advanced strategies like 1031 exchanges or tax-loss harvesting
Conclusion
Florida offers a tax-friendly environment with no state-level capital gains or income tax, making it uniquely beneficial for residents. That said, federal capital gains tax remains, and understanding its structure—along with exemptions and strategic planning—is important if you want to minimize liability. Partnering with Insight Wealth Strategies’ tax planning knowledge can help you navigate these waters efficiently and proactively.
Reviewed by,
Chad Seegers, CRPC®
Chad began his career with Sagemark Consulting in 2005 and then became a Select member of Sagemark’s Private Wealth Services which operated as a national resource for financial planners focusing on Advanced Strategies in the High Net Worth marketplace. Chad then began his partnership with Insight Wealth Strategies in 2013 focused on retirement planning primarily with Oil and Gas employees and executives. His primary areas of expertise are retirement, estate, and investment strategies as he serves as Investment Strategist for the financial planning team.
Sources:
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Insight Wealth Strategies, LLC (IWS) and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
