Florida is one of the most popular states for new businesses, and taxes are a big reason. There is no personal income tax, so owners of LLCs, partnerships, S corporations and sole proprietorships pay nothing to the state on their profit. C corporations pay 5.5%, but only on income above $50,000. Florida funds its government through sales tax, tourism taxes and property taxes instead.
This guide covers Florida's business taxes for 2026, including the repeal of the commercial rent tax, and compares Florida with its neighbors.
Corporate income tax
Florida taxes C corporations at 5.5% of Florida net income, after a $50,000 exemption.
| Florida net income | Tax |
|---|---|
| First $50,000 | 0% |
| Above $50,000 | 5.5% |
- Who pays: C corporations and LLCs that elect to be taxed as corporations. S corporations are exempt except on built-in gains and excess passive income.
- Apportionment: Florida uses a three-factor formula with a double-weighted sales factor.
- Returns: Form F-1120 is due on the 1st day of the fifth month after year-end (May 1 for calendar-year filers), or later for some fiscal years.
- Credits: Research, capital investment and community contribution credits, among others.
A corporation earning $100,000 pays just $2,750 in Florida income tax.
No personal income tax
Florida's constitution prohibits a personal income tax. Business owners benefit in several ways:
- Pass-through profit is untaxed at the state level.
- No withholding for employees.
- Retirees and remote workers keep more of their income, which supports consumer demand.
Owners who move to Florida from high-tax states should be careful about residency. States like New York and California audit taxpayers who claim Florida residency while keeping ties to their former home.
Sales and use tax
The state sales tax rate is 6%. Counties can levy discretionary sales surtaxes of up to 2%, bringing the average combined rate to about 6.98%.
- Surtax cap: Local surtaxes apply only to the first $5,000 of a single item, which helps buyers of expensive goods.
- Commercial rent: Florida repealed the sales tax on commercial leases effective October 1, 2025. Before that, businesses paid about 2% plus local surtax on rent.
- Remote sellers: Out-of-state sellers with more than $100,000 of taxable Florida sales must collect.
- Tourism taxes: Hotels and short-term rentals add tourist development taxes of up to 6% or more.
Other Florida business taxes
- Reemployment tax: Florida's unemployment tax applies to the first $7,000 of each employee's wages. New employers start at 2.7%, so the cost is at most $189 per employee per year.
- Tangible personal property tax: Businesses report equipment and furniture to the county each year. The first $25,000 of assessed value is exempt.
- Documentary stamp tax: 0.35% on promissory notes and 0.7% on deeds in most counties.
- Local business tax: Most cities and counties charge an annual local business tax receipt, typically $25 to a few hundred dollars.
- Communications services tax: Applies to phone, cable and streaming services.
Forming a business in Florida: fees and ongoing costs
| Item | LLC | Corporation |
|---|---|---|
| Formation filing fee | $125 | $70 |
| Annual report | $138.75 (due May 1) | $150 (due May 1) |
| Late fee | $400 | $400 |
| Registered agent | Required | Required |
| Local business tax receipt | City and county | City and county |
The $400 late fee is steep, so calendar the May 1 deadline.
Worked example: $500,000 of profit
| Step | Amount |
|---|---|
| Taxable income | $500,000 |
| Florida corporate tax: 5.5% on $450,000 | $24,750 |
| Federal tax at 21% on $475,250 | $99,803 |
| Total income tax | $124,553 (24.9%) |
A single LLC owner with $150,000 or $75,000 of profit pays $0 in Florida income tax.
How Florida compares with its neighbors
Florida's lack of a personal income tax gives it a clear advantage for pass-through owners over Georgia and Alabama. Among no-income-tax states, Florida competes with Texas, Tennessee, Nevada and Washington, each of which charges its own entity-level or gross receipts tax.
Choosing an entity in Florida
- LLC: The default choice. No state income tax for owners and a $138.75 annual report.
- S corporation: Same state treatment as an LLC, with federal self-employment savings for profitable businesses.
- C corporation: Pays 5.5% above $50,000. Small C corporations often pay little or no Florida tax.
Tax planning tips for Florida businesses
Establish residency carefully. If you move to Florida from New York, New Jersey, California or another high-tax state, your former state may still claim you as a resident. File a declaration of domicile, get a Florida driver's license, register to vote, move your important belongings and spend the majority of the year in Florida. Keep records of where you spend each day. Business owners who sell a company shortly after moving are the most common audit targets.
Use the $50,000 corporate exemption wisely. Florida's corporate income tax exemption applies to each taxpayer, but related corporations filing in Florida must share a single $50,000 exemption. Splitting a business into multiple corporations does not multiply the benefit.
Review your sales tax after the rent tax repeal. If you previously paid sales tax on commercial rent, update your accounts payable systems so the tax is no longer charged. Landlords should also update leases and invoices.
Budget for property insurance. Florida has no income tax, but insurance premiums for commercial property, especially in coastal counties, can exceed what businesses in other states pay in state income tax. Include insurance when comparing Florida with Texas, Tennessee or the Carolinas.
Look at the reemployment tax rate after year one. New employers pay 2.7% on the first $7,000 of wages, but the rate can fall to as little as 0.1% for employers with few claims. Florida's low wage base keeps unemployment costs well below most states, which is another hidden advantage for employers with large workforces.
Recent changes for 2025 and 2026
- Business rent tax repealed from October 1, 2025.
- Sales tax holidays: Florida made its August back-to-school sales tax holiday permanent and added exemptions for some hurricane supplies.
- Federal conformity: Florida updates its corporate income tax conformity to the Internal Revenue Code annually. Check whether the latest federal depreciation and research expensing changes have been adopted for your tax year.
Is Florida a good state for business?
Advantages
- No personal income tax for owners or employees
- Low corporate tax with a $50,000 exemption
- Large, growing consumer market and strong tourism
- Commercial rent is no longer taxed
Drawbacks
- High property insurance costs, especially in coastal areas
- $400 late fee on annual reports
- Rising real estate and living costs in major metros
- Hurricane risk for physical operations
Compliance checklist
- File Articles of Organization or Incorporation on Sunbiz with the Division of Corporations.
- Register with the Department of Revenue for sales tax and reemployment tax.
- Obtain a local business tax receipt from your city and county.
- File the annual report between January 1 and May 1.
- File tangible personal property returns with the county by April 1.
- C corporations file Form F-1120 each year.
Compare Florida with its neighbors below, or estimate your taxes with the United States calculator. See LLC taxes to learn when an S corp election makes sense.