Does Florida Have an Estate Tax?
No. Florida does not impose a state estate tax, inheritance tax, or gift tax. This is one of the primary reasons high-net-worth individuals and retirees move to Florida. However, Florida residents are still subject to the federal estate tax, which can claim up to 40% of your estate value above the exemption threshold.
The current federal estate tax exemption is $13.61 million per individual and $27.22 million for married couples (2024 figures). Estates below this threshold owe no federal estate tax. But this historically high exemption is scheduled to decrease significantly after 2025 when the Tax Cuts and Jobs Act provisions expire, potentially dropping to approximately $6 to $7 million per person.
Proactive estate tax planning now can save your family millions in future taxes. At Barnes Walker, our estate planning attorneys help Florida families prepare for both current and future tax environments.
Federal Estate Tax: How It Works
The federal estate tax is calculated on your gross estate, which includes:
- All real property (home, rental properties, vacation homes, land)
- Bank accounts, investment accounts, and retirement accounts
- Life insurance death benefits (if you own the policy)
- Business interests (LLC memberships, partnerships, corporate stock)
- Personal property (vehicles, jewelry, art, collections)
- Assets in a revocable trust (still counted as part of your estate)
After subtracting allowable deductions (debts, funeral expenses, charitable gifts, marital deduction), the remaining taxable estate is subject to a graduated tax rate up to 40% on amounts exceeding the exemption.
Gift Tax Rules and the Annual Exclusion
The federal annual gift tax exclusion allows you to give up to $18,000 per recipient per year (2024) without using any of your lifetime exemption or filing a gift tax return. Married couples can give up to $36,000 per recipient through gift splitting.
Gifts exceeding the annual exclusion are applied against your lifetime exemption ($13.61 million). You file a gift tax return (Form 709) to report the excess, but no tax is owed until the lifetime exemption is exhausted.
Certain transfers are exempt from gift tax entirely:
- Tuition payments paid directly to an educational institution
- Medical expenses paid directly to the healthcare provider
- Gifts between spouses (unlimited marital deduction)
- Gifts to qualified charities
Strategies to Reduce Estate Taxes
1. Lifetime Gifting
Systematic gifting during your lifetime reduces your taxable estate. A married couple with three children and six grandchildren could transfer up to $648,000 per year ($36,000 x 9 recipients x 2 spouses) without using any lifetime exemption.
2. Irrevocable Life Insurance Trust (ILIT)
Life insurance proceeds are included in your taxable estate if you own the policy. An irrevocable life insurance trust owns the policy instead, removing the proceeds from your estate entirely. For a $5 million policy, this alone could save your family up to $2 million in estate taxes.
3. Charitable Remainder Trust (CRT)
A CRT provides you with income during your lifetime, then distributes the remaining assets to a charity. You receive an immediate income tax deduction and remove the assets from your taxable estate. See our charitable giving guide.
4. Grantor Retained Annuity Trust (GRAT)
A GRAT allows you to transfer appreciation on assets to beneficiaries with minimal or no gift tax. You retain an annuity payment for a fixed term, and any growth above the IRS assumed interest rate passes to your beneficiaries tax-free.
5. Family Limited Partnership (FLP)
An FLP allows you to transfer business or investment assets to family members at a discounted value (due to lack of marketability and minority interest discounts), reducing your gift and estate tax exposure.
6. Spousal Portability
When the first spouse dies, their unused estate tax exemption can be transferred to the surviving spouse by filing a federal estate tax return (Form 706). This effectively doubles the exemption to $27.22 million for the surviving spouse. The return must be filed within 9 months of death, even if no tax is owed.
The 2025 Sunset: Why Planning Now Matters
The current $13.61 million exemption was created by the Tax Cuts and Jobs Act of 2017. Unless Congress extends it, the exemption will revert to approximately $6 to $7 million per person after December 31, 2025. For a married couple with a $20 million estate, this change could create a federal estate tax bill of $2.5 million or more.
Families who take advantage of the current high exemption through lifetime gifting or trust planning before the sunset can lock in those transfers. The IRS has confirmed that gifts made under the higher exemption will not be clawed back even if the exemption decreases.
Frequently Asked Questions
Does Florida have an estate tax?
No. Florida has no state estate tax, inheritance tax, or gift tax. However, the federal estate tax applies to estates exceeding $13.61 million per individual (2024).
How can I reduce my estate taxes?
Common strategies include lifetime gifting, irrevocable trusts, irrevocable life insurance trusts (ILITs), charitable remainder trusts, grantor retained annuity trusts, and maximizing spousal portability.
What is the gift tax exclusion?
The annual gift tax exclusion allows you to give $18,000 per recipient per year (2024) without using your lifetime exemption. Married couples can give $36,000 per recipient through gift splitting.
What is portability of the estate tax exemption?
Portability allows a surviving spouse to use the deceased spouse's unused exemption. A Form 706 must be filed within 9 months of the first spouse's death to preserve it.
Concerned about estate taxes? Contact Barnes Walker for tax-efficient estate planning.