You’re probably looking at your accounts, thinking about the future, and wondering if the Sunshine State is going to take a final bite out of your legacy. It’s a fair question. Florida has a reputation for being a "tax haven," but when it comes to the "death tax," things can feel a little murky—especially with all the federal changes that just kicked in for 2026.
Let's get the big answer out of the way first. Florida does not have an estate tax. Honestly, it’s one of the biggest reasons people keep flocking here from places like New York or Oregon. If you die a resident of Florida, the state itself is not going to send a bill to your heirs for the privilege of inheriting your house or your savings. But wait. Before you pop the champagne, there's more to the story. Just because the state isn't knocking doesn't mean the IRS isn't.
The Constitutional Protection Most People Miss
Florida doesn't just "happen" to have no estate tax; it’s actually baked into the state’s DNA. Specifically, Article VII, Section 5 of the Florida Constitution prohibits the state from levying an estate or inheritance tax that exceeds the credit allowed by the federal government.
For years, the federal government allowed a "state tax credit." Since that credit was basically eliminated at the federal level years ago, Florida’s ability to collect a "pick-up tax" vanished with it.
The state couldn't easily start a new estate tax even if it wanted to. It would likely require a massive constitutional overhaul. You’re essentially protected by the highest law in the state.
Does Florida Have an Estate Tax or Inheritance Tax?
People often use these terms interchangeably, but they're different.
An estate tax is a tax on the right to transfer property at your death. It’s taken out of the total "pot" before anyone gets a cent. An inheritance tax is what your kids or friends pay on the specific amount they receive.
Florida has neither.
If you inherit $5 million from your Aunt Mabel in Sarasota, you don’t owe the Florida Department of Revenue anything on that windfall. If you live in a state like Iowa or Pennsylvania, your experience would be very different. Florida is remarkably hands-off here.
The 2026 Federal Game-Changer: The "Big Beautiful Bill"
While Florida remains a zero-tax zone, the federal landscape just shifted in a massive way. For a long time, we were all staring at a "tax cliff" set for January 1, 2026. The old exemptions were supposed to be cut in half.
That didn't happen.
With the passage of the One Big Beautiful Bill Act (OBBBA) in July 2025, the federal estate tax exemption actually increased. For 2026, the individual exemption is now $15 million. If you're married and do your paperwork right, you can shield $30 million from federal taxes.
- The 40% Sting: If your estate is worth more than that $15 million (or $30 million for couples), the IRS takes a 40% cut of every dollar over the limit.
- The Inflation Factor: This $15 million isn't a stagnant number. It's indexed for inflation, so it will keep creeping up year after year.
- Portability is Key: If your spouse dies, you don't automatically get their $15 million exemption. You have to file a federal estate tax return (Form 706) to "claim" it. If you forget, you might lose $15 million worth of protection.
Basically, unless you are sitting on a massive pile of wealth, you probably won't owe a dime in federal estate taxes either. But for the high-net-worth families in Naples or Palm Beach, the 2026 rules are a huge relief.
Real Examples: Who Actually Pays?
Let's look at how this plays out in the real world.
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Case 1: The "Everyday" Floridian
John dies in Orlando with a $1.2 million home, a $400,000 401(k), and some fishing gear.
- Florida tax: $0.
- Federal tax: $0.
- His kids get everything.
Case 2: The Successful Business Owner
Sarah owns a tech firm and several rental properties in Miami. Her total estate is valued at $18 million. She is single.
- Florida tax: $0.
- Federal tax: She is $3 million over the $15 million exemption. The IRS takes 40% of that $3 million.
- Total tax bill: $1.2 million (paid to the IRS, not Florida).
The Hidden Costs: It’s Not Just Taxes
Just because there isn't an estate tax doesn't mean it's "free" to die in Florida. There are three big things that can still drain an estate:
- Probate: This is the court-supervised process of distributing your stuff. If you just have a simple Will, your estate might have to go through probate. It’s slow. It’s public. And attorneys usually take a percentage of the estate's value.
- Income Tax on IRAs: If you leave your kids a traditional IRA, they don't pay "inheritance tax," but they do pay regular income tax when they take the money out. Thanks to the SECURE Act, most non-spouse beneficiaries have to empty that account within 10 years. That can be a massive tax hit.
- Capital Gains: If you bought a beach house for $100,000 in the 90s and it’s now worth $2 million, your kids get a "step-up in basis." This means if they sell it immediately for $2 million, they pay $0 in capital gains tax. This is a huge benefit of Florida real estate.
Out-of-State Property: The Catch
Here is where people get tripped up. If you live in Florida but own a cabin in Vermont or a brownstone in New York, you might be in trouble.
Florida can’t tax your out-of-state property, but the state where the property is located can. Some states have estate tax exemptions as low as $1 million or $2 million. If you own property in one of those states, your estate might have to file a tax return there, even if you are a "full-time" Floridian with a driver's license and a voter registration card from Lee County.
Practical Steps to Protect Your Wealth in 2026
You don't need to panic, but you do need to be smart. The rules have changed, and your old documents might be dusty.
- Check Your "Formulas": Many older Wills and Trusts use formulas like "give the maximum amount allowed under the federal exemption to a trust." When the exemption was $1 million, that made sense. Now that it's $15 million, that formula might accidentally dump your entire estate into a trust and leave your spouse with nothing in their own name.
- Update Your Residency: If you recently moved here, make sure you've actually severed ties with your old, high-tax state. File a Declaration of Domicile in your Florida county. Get your Florida license. Register to vote. High-tax states like New York are aggressive about auditing "former" residents.
- Gifting is Your Friend: For 2026, the annual gift tax exclusion is $19,000. You can give $19,000 to as many people as you want every year without even telling the IRS. If you’re married, you can give $38,000. It’s a great way to shrink a taxable estate while you’re still around to see the kids enjoy it.
- Review Your Beneficiaries: Make sure your life insurance and retirement accounts have the right people listed. These assets bypass probate entirely, which is the fastest way to get money to your family without court interference.
Florida remains one of the most friendly places in the world to leave a legacy. No state estate tax, no inheritance tax, and a newly inflated federal shield mean that for most of us, the government is staying out of the way. Just keep an eye on those out-of-state properties and make sure your 2026 paperwork is actually updated for the current laws.
Don't let a "simple" Will from 15 years ago ruin a perfectly good tax-free setup. If you own property in another state or have an estate creeping toward that $15 million mark, sit down with a Florida-licensed estate attorney this year to verify your residency and formula clauses.