Tax Comparison - Florida Verses Georgia
Live in Florida or Georgia? Where would you like to enjoy an active retirement or change of pace leading up to full retirement? No doubt, you’ll want to do a cost of living comparison if you’re trying to decide between the two. The amount of Florida or Georgia taxes you can expect to pay should be included in your budgeting process. Like other states, Georgia and Florida fund much of their state and local budgets by a combination of sales, income, property and assorted usage fee taxes. In Florida, real estate property taxes and sales taxes make up the lion’s share, whereas income and sales taxes provide the most tax revenue in Georgia.
Interestingly, analysts at WalletHub, a personal financial literacy website, compared all 50 states for the total state “tax burden” in each. This tax burden measures, on average, how much of a particular state’s residents’ personal income goes toward property taxes, income taxes and sales taxes by dividing the total state tax burden by total personal income in the state, resulting in a percentage. For 2016, Florida ranked 44 out of 50 with a 7.22% tax burden, and Georgia taxes ranked 35 with 8.31%.
Because there are many variables associated with a tax position, you should always consult your tax professional to determine which items may most impact your personal situation. All information provided below is for 2015, unless otherwise noted.
Personal Income Tax
There are no personal income taxes in Florida. Florida does not tax any source of personal income, whether from employment, social security or investments. Georgia, on the other hand, does collect personal income taxes on all sources of taxable income at rates ranging from one to six percent, depending on income bracket. The highest bracket for singles applies to taxable income over $7,000 and for married couples on income over $10,000 after personal exemptions of $2,700 for singles, $5,400 for married couples and $3,000 for dependents. Additionally, local municipalities or counties may tax net income at one percent.
However, for older Georgia residents, the news is good! Social security income is not taxed and permanently disabled taxpayers as well as those between 62 and 64 years old may exclude up to $35,000 of retirement income from sources like pensions and investments plus $4,000 in earned income from personal income taxes in Georgia. For taxpayers 65 and older, that retirement income exclusion increases to $65,000 ($130,000 for married couples). These generous state income tax exemption levels make Georgia an attractive tax environment for those in or nearing retirement.
Sales Tax and Use Tax
The base rate for state sales taxes in Florida is 6%. Local municipalities may add sales taxes, resulting in an average combined Florida sales tax rate of 6.65%. Drugs, dentures, prescription glasses, hearing aids, some medical devices, and unprepared food items are exempt from sales taxes. In Georgia, the state base sales tax rate is 4%, with local taxes adding an average of approximately 3%, and the City of Atlanta adding another 1%. Food and prescription drugs are exempt from state sales taxes in Georgia, although local sales taxes may apply. Eyeglasses, hearing aids, oxygen and various other durable medical equipment and supplies are also exempt Both states require use taxes equal to the state base sales tax rate to be paid on items purchased from outside the state (i.e., catalog and Internet sales or purchases bought elsewhere and brought across state lines) if no tax was collected by the seller.
Real Estate Taxes
Real estate property values for tax purposes are usually determined by the county, with millage rates set by counties, cities and municipalities to fund schools, fire and police protection, waste management, and other local services. In Florida, the local appraisal district (by county) assesses a home’s market (just) value when a change in ownership occurs. After that, just value increases are capped at a maximum of three percent per year. Homeowners may file for a homestead exemption on their primary residence. The homestead value is portable within the state of Florida, so the homeowner can sell one homestead-exempt property and buy another in Florida without having to pay taxes based on a new, higher just value. This is particularly valuable for those who intend to stay in a home for several years or in markets that are rapidly appreciating.
Florida homeowners may receive homestead exemptions of up to $50,000, with the first $25,000 exempt from all types of property taxes in Florida. The second $25,000 exemption applies only to assessed values between $50,000 and $75,000 and only to non-school taxes. Widows and widowers, the elderly, blind or disabled, active military or veterans, and surviving spouses of first responders can receive additional exemptions on homesteaded property. Millage rates (tax per $1,000 of value) can range considerably by location.
In Georgia, local appraisal boards also determine property values and a home is taxed on 40 percent of appraised value. Homeowners may also apply for a state homestead exemption on their primary residence, and that standard exemption further excludes another $2,000 from county and school taxes in Georgia, except for certain school taxes levied by municipalities. Some counties offer additional exemption levels above the state levels. Additionally, the Georgia Constitution grants the power to counties to put a freeze on the value of a homesteaded property for as long as the homeowner lives there. Currently, 36 counties (of 159) offer this exemption. Millage rates in Georgia also vary by county and municipality. Contact the tax assessor’s office in your prospective county to learn about millage rates and all exemptions that might apply to you.
As with income taxes in Georgia, the state is senior-friendly when it comes to real estate taxes. Homeowners 65 and over can apply for an additional $4,000 homestead exemption if their annual income is less than $10,000 (retirement income is excluded) and their social security benefit is below $63,336 (for 2016). Those in the 62-64 age range may also claim additional ad valorem tax exemptions for educational purposes, which are also subject to income restrictions. A floating inflation-proof exemption, similar to the assessed value increase caps in Florida, is available to those 62 and older for their Georgia home that has increased in value more than $10,000. This exemption is also income-restricted, with a $30,000 income limit per household. There are various additional exemptions available for disabled veterans and surviving spouses of military and first responder personnel who died in the line of duty.
Real Estate Transfer Taxes
Real estate transfer taxes in Florida and mortgage instrument taxes (if applicable) are paid upon the purchase of any real property. The state levies a $.70 per $100 of sale price in a documentary stamp tax on transfer deeds for residences ($.60/$100 in Miami-Dade County). While the deed transfer tax is typically paid by the seller, sometimes the buyer pays. Florida also taxes mortgages recorded upon purchase. This document stamp rate is $.35 per $100 of note value. Usually, the buyer pays this tax unless exempt for some reason (VA and FHA transactions often limit buyer closing costs). For a $300,000 home purchased with a $200,000 mortgage, this equates to a total of $2,800 taxes paid at closing.
In Georgia, only mortgages (long-term notes secured by real estate) must be recorded by the lender and the tax is paid in the county where the real property sits. The holder of the mortgage pays the tax, but is allowed to pass the cost on to the homebuyer. This intangible recording tax rate on the mortgage is $1.50 per $500 (or fraction thereof) of the amount of the note up to a maximum tax of $25,000. As an example, a home purchase that includes a $200,000 mortgage will incur recording taxes in Georgia of $600, which cost of sale the lender may pass on to the homebuyer.
Personal Property Taxes
Neither Florida nor Georgia taxes personal or household goods, so there are no property taxes on tangible property. State of Florida resident vehicles must be titled and are subject to annual registration fees. The initial registration fee is $225 and annual registration fees vary by vehicle type from approximately $14 to $46.
Georgia also requires residents to title and register their vehicles. Initial title transfer fees are $18 for a standard car or truck, with an annual registration fee of $20. In the Atlanta metro area, emissions testing and fees also apply. Vehicles purchased in Georgia after 2013 pay a one-time ad valorem tax instead of sales tax and annual property tax. The amount of the tax varies depending on type and age of vehicle and the county where it is purchased. Visit the state's website to determine what you might expect pay. For both states, check your prospective county’s website for specific information on registration and taxes for trailers, boats and recreational vehicles.
There are no estate or inheritance taxes in Florida, no capital gains taxes, and no intangibles taxes (bonds, stocks, mortgages, etc.). Georgia also does not impose estate or inheritance taxes, or intangibles tax. However, Georgia does tax capital gains at rates according to income bracket, with a top rate of six percent.
Sunshine or Peaches?
Disneyworld or Stone Mountain? Are you drawn to the tropical sands of south Florida, or the scenic Blue Ridge Mountains of northern Georgia? There are dozens of wonderful communities in either state that offer a wide range of housing styles and prices as well as amenities popular with boomers. If your perfect place hinges on proximity to a particular lifestyle, Florida is undeniably a water sports and boating paradise, with sandy Gulf or Atlantic beaches rarely more than an hour away. Georgia, one of the original 13 colonies, is steeped in history and offers mountain as well as beach environs. Both states offer major cultural hubs like Miami or Atlanta and enjoy long stretches of coastline where sport fishing is a big pastime.
While you can certainly expect to pay a premium for beachfront properties in both states and in upscale areas surrounding Tampa, Miami, Atlanta and Savannah, you are sure to find many appealing and affordable communities when making a cost of living comparison. There is an abundance of Florida and Georgia housing available at all price points in friendly communities where you can enjoy life to the fullest.
TAX COMPARISON AT A GLANCE
- INCOME TAX – None
- CAPITAL GAINS – None
- INTANGIBLES TAX – None
- SALES & USE TAX – Base rate of 6% plus local tax for average 6.65%, with unprepared food and drug sales exempt
- REAL ESTATE TAX – Millage varies by municipality and is applied per $100 of assessed value (on last sale and capped at 3% annual increase) after homestead and other exemptions
- TRANSPORTATION – Gasoline excise tax $.285/gal; Sales tax on full price of vehicles (including trailers and recreational vehicles) plus discretionary sales surtax by county on first $5,000 of purchase; Annual vehicle registration fees $14.50 - $32.30 for autos; Title fees $77 to $85
- PERSONAL PROPERTY – None
- ESTATE / INHERITANCE TAX – None
- INCOME TAX – six income tax brackets ranging from 1% to 6% rates, with exemptions of $2,700 to $5,400 on taxable income. Retirement income exclusion of $35K per individual for those aged 62-64 and $65K for those aged 65+
- CAPITAL GAINS – uppermost rate of 6% for combined state and federal uppermost rate of 28.6%
- INTANGIBLES TAX – None
- SALES & USE TAX – 4% state tax with additional average local taxes of about 3%, with food and prescription drug sales exempt
- REAL ESTATE TAX – Millage varies by municipality and is applied per $100 of 40% of appraised value after homestead and other exemptions
- TRANSPORTATION – Gasoline excise tax $.193/gal on gas and gasohol; $.213 on diesel. $18 title transfer fee and annual $20 registration fee. Emissions inspection and fee required in metro Atlanta area.
- PERSONAL PROPERTY – One-time title ad valorem tax payable at time of vehicle purchase.
- ESTATE / INHERITANCE TAX – None
Be sure to check with a Certified Public Accountant or Tax Attorney to verify this information and how if effects you.
Sources of Data:
- State of Florida Official Website
- Florida Department of Revenue
- Florida Department of Highway Safety and Motor Vehicles
- The State of Georgia official website
- State of Georgia Department of Revenue
- Ballotpedia > Tax Policies by state