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The short answer: Florida has no state inheritance tax and no state estate tax. Florida is one of the most tax-friendly states in the country for inheritances. However, that does not mean an inheritance is always tax-free — there are four taxes that can still apply, and the rules differ depending on what was inherited, who the beneficiary is, and where the decedent lived.
This guide covers what Florida residents need to know about taxes on an inheritance — what does NOT apply, what might apply, and the four scenarios where federal tax can still reach a Florida estate.
Florida abolished its estate tax in 2004 and has never had an inheritance tax. The Florida Constitution (Article VII, Section 5) prohibits the state from imposing such taxes. This means:
Applies only when the total estate exceeds the federal exemption ($13.61M individual / $27.22M married couple in 2024, indexed annually). Less than 1% of Florida estates pay it.
Inherited 401(k), IRA, and pension distributions are taxable income to the beneficiary in the year received. Roth accounts are different and may be tax-free.
When you sell inherited property, you pay capital gains on the difference between the sale price and the 'stepped-up basis' (the fair market value at the decedent's death).
If the decedent owned property in another state with inheritance tax (Iowa, Kentucky, Maryland, Nebraska, New Jersey, or Pennsylvania), that state's tax may apply to the out-of-state portion.
No. Florida has no inheritance tax and no estate tax. Florida abolished its estate tax in 2004 and has never had an inheritance tax. The Florida Constitution (Article VII, Section 5) prohibits the state from imposing these taxes. This applies regardless of the size of the estate or the relationship between the decedent and the beneficiary.
Generally, no. Florida does not tax inheritances. However, you may owe federal income tax on inherited retirement accounts (401(k), IRA, pension), federal estate tax if the total estate exceeds $13.61 million (2024), capital gains tax if you sell inherited property for more than its date-of-death value, or out-of-state inheritance tax if the decedent owned property in Iowa, Kentucky, Maryland, Nebraska, New Jersey, or Pennsylvania.
For Florida state taxes, no. Florida has no state income tax and no inheritance tax. For federal taxes, you generally do not report the inheritance itself as income, but you do report (1) any income generated by inherited assets after the date of death, (2) distributions from inherited retirement accounts, and (3) any capital gains when you sell inherited property.
Yes, Florida is among the most tax-friendly states. Florida has no state income tax, no estate tax, no inheritance tax, no tax on retirement income (Social Security, pensions, IRA distributions are not state-taxed), and a homestead exemption that reduces property tax on a primary residence by $50,000. This is why many retirees relocate to Florida.
The federal estate tax exemption for 2024 is $13.61 million per individual and $27.22 million for a married couple (with portability). The exemption is indexed for inflation annually. Estates below this amount owe no federal estate tax. Estates above this amount are taxed at rates up to 40% on the excess. The exemption is scheduled to drop to approximately $7 million per individual on January 1, 2026, unless Congress extends the current law.
No tax is owed when you inherit the house. You receive the house at a ‘stepped-up basis’ equal to its fair market value at the decedent’s death. If you later sell the house, you pay federal capital gains tax only on the difference between the sale price and that stepped-up basis. If you live in the house as your primary residence for at least 2 of the 5 years before sale, you can also exclude up to $250,000 ($500,000 married) of gain under IRC § 121.
No. Life insurance death benefits paid to a named beneficiary are not subject to Florida tax and are generally not subject to federal income tax. Federal estate tax may apply if the decedent had ‘incidents of ownership’ over the policy and the total estate exceeds the federal exemption.
No Florida tax (because Florida has no state income tax), but yes to federal income tax. Distributions from inherited traditional IRAs, 401(k)s, and pensions are taxable as ordinary income to the beneficiary in the year received. The SECURE Act requires most non-spouse beneficiaries to fully distribute the account within 10 years of the original owner’s death. Inherited Roth accounts may be distributed tax-free if the original owner held the account for at least 5 years.
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