Is There a Probate Tax in Florida?

While there are fees and expenses associated with the probate process in Florida, the state has no inheritance tax. Also known as “estate tax” or “death tax,” the inheritance tax is the legal rate at which a state taxes the estate of someone who died owning property.

Fortunately, the inheritance tax rate in Florida is zero. Accordingly, neither in-state residents nor their heirs owe any estate taxes or inheritance taxes to the state upon death. Keep reading to discover more about probate & inheritance tax in Florida.

Florida Inheritance Tax Law – An Overview

In Florida, the inexistence of inheritance taxes is a constitutional matter. Accordingly, the state’s Constitution prohibits inheritances taxes; thus, the state legislature cannot enact an estate tax or inheritance tax inconsistent with Florida Constitution.

Still, is there a possibility to change the law? Ultimately, state voters would have to amend the constitution, which would require at least 60% voter approval. Accordingly, Florida residents are protected by law against estate or inheritance taxes.

Nonetheless, an in-state resident who dies might still owe an estate tax for property located out of the state. For instance, if a Florida resident dies owning valuable property in New Jersey, then he/she may owe tax in the other state.

How Does Federal Estate Tax Affect Florida Residents?

Indeed, Florida residents are still subject to US federal estate tax. As provided by U.S. Code § 2001(a), “a tax is hereby imposed on the transfer of the taxable estate of every decedent who is a citizen or resident of the United States.”

Accordingly, the amount of estate tax is based upon the assets of the deceased person multiplied by a progressive tax rate. The Internal Revenue Service (IRS) considers only the decedent’s “taxable estate” or the “gross estate” when applying the federal tax rate, which starts at 40%.

Also, there is no gift tax in Florida, as it was repealed in 2004. However, state residents are still subject to the Federal gift tax rules. Nationwide, most states do not impose an estate or inheritance tax. As of 2021, only 13 US states impose estate taxes, which are:

Connecticut
District of Columbia
Hawaii
Illinois
Maine
Massachusetts
Maryland
New York
Oregon
Minnesota
Rhode Island
Vermont
Washington State

Currently, only six US states impose inheritance tax – Kentucky, Nebraska, Maryland, New Jersey, Pennsylvania, and Iowa

Federal Estate Tax Exemption in Florida – Updated

Currently, the estate tax exemption is $11,700,000 (it is worth noting that exemption increases with inflation). Thus, each US citizen is entitled to exempt the set amount from estate taxation on assets held in their taxable estate.

Nonetheless, the estate tax exemption will increase to $12.06 million in 2022. Hence, if a Florida resident dies owning less than $12.06 million in taxable assets, then the decedent will not owe inheritance taxes at all, considering there will be neither state nor federal estate taxes.

Ultimately, tax law is a complex subject that requires expert guidance. Ideally, the best approach to handle estate taxation correctly is to seek guidance with an expert probate attorney as soon as possible.