Does Florida Have an Estate Tax?
No. Florida has not had a state estate tax since 2004, and Florida has no inheritance tax or state income tax either. But that answer is where most families stop looking, and it is the single most expensive assumption we see. A Florida estate can still owe federal estate tax, federal income tax, and capital gains tax. Those obligations don’t disappear just because the state’s does.
Here is what actually applies after a death in Florida, and where families lose the most money.
The short version
Swipe or scroll sideways to compare all columns.
| Tax | Does Florida impose it? | Does a Florida estate still face it? |
|---|---|---|
| State estate tax | No — repealed for deaths after 12/31/2004 | No |
| State inheritance tax | No | No |
| State income tax | No | No |
| Federal estate tax | N/A | Yes — on estates above $15 million (2026) |
| Federal income tax | N/A | Yes — final Form 1040, plus Form 1041 for the estate or trust |
| Capital gains tax | N/A | Yes — though step-up in basis often eliminates it |
| Another state’s estate tax | N/A | Yes — if the decedent owned property in a state that imposes one |
Why Florida Has No Estate Tax
Florida did once have an estate tax, but it worked differently than most people assume. It was a “pick-up” tax: Florida’s tax was equal to the credit the federal government allowed against the federal estate tax for state death taxes paid. Florida collected a share of what would otherwise have gone to the IRS, and estates paid nothing extra.
When Congress phased out that federal credit, Florida’s tax had nothing left to pick up. The Florida Department of Revenue confirms the state’s estate tax was eliminated for anyone who died after December 31, 2004. As of July 1, 2023, personal representatives no longer need to file the old Affidavit of No Florida Estate Tax Due (Forms DR-312 and DR-313) either.
So the state-level answer is genuinely clean. Everything below it is not.
What Is the Federal Estate Tax Exemption in 2026?
For 2026, the federal estate tax exemption is $15 million per person, and $30 million for a married couple who preserve both exemptions. Estates valued below that threshold owe no federal estate tax.
Above it, the top federal estate tax rate is 40%. And this is the part families misread: that 40% applies to the value of the assets above the exemption, not to the appreciation. It is not a capital gains tax with a different name. On a large estate, it is the most significant single tax exposure in the entire administration.
The $15 million figure was set by the 2025 tax legislation and is indexed for inflation going forward. It replaced the scheduled 2026 drop that estate planners had been bracing for. “Permanent,” in tax law, means until Congress changes it — and the exemption has moved repeatedly over the past two decades. Planning that only works at $15 million is planning that assumes Congress never legislates again.
What Is Portability, and Why Do Families Lose It?
Portability lets a surviving spouse claim the deceased spouse’s unused federal estate tax exemption — the “DSUE” amount — and add it to their own. It is how a couple reaches $30 million of combined exemption.
But portability is not automatic. It must be elected on a federal estate tax return (Form 706) filed for the first spouse to die, even when that estate was far too small to require a return at all.
This is the mistake that costs the most money, and it is entirely avoidable. A family whose first spouse dies with a $2 million estate has no federal filing obligation and no tax due. Nobody files anything. Fifteen years later the surviving spouse dies with an $18 million estate, and the family discovers the first exemption was never preserved.
“I have seen this mistake result in millions of dollars paid to the IRS for a lost portability.”
The deadlines:
- 9 months from the date of death to file Form 706, with an available 6-month extension (Form 4768).
- 5 years under the IRS safe harbor in Revenue Procedure 2022-32 — available specifically to estates that were not otherwise required to file a 706. The IRS originally set this relief at two years and extended it to five because so many families were missing the election.
- Beyond 5 years, relief generally requires a private letter ruling, which is expensive, but on a large exemption, sometimes worth it.
If your spouse died within the last five years and you have a sizable estate, this is worth a conversation now. The window is longer than most people are told, and a 706 filed solely to elect portability is a comparatively straightforward return.
Income Tax Does Not Die With You
A death creates income tax obligations in two directions, and both get missed.
The Final Form 1040
A decedent must file a final individual income tax return (Form 1040) covering their last year, if they were required to file. That “if” matters. Some people stop filing in later years because their income drops below the threshold — and the family has no way to know whether a filing obligation existed. Part of a properly handled probate or trust administration is determining that, which often means requesting transcripts directly from the IRS.
Form 1041: Income Tax for the Estate or Trust
An estate or trust that earns income during administration files Form 1041. It reports income, takes allowable deductions, and arrives at net income — which is then taxed either at the estate or trust level, or at the beneficiary level if income is distributed out.
That choice is worth real money, because of one number:
In 2026, an estate or trust reaches the top 37% federal income tax bracket at just $16,000 of taxable income. Individual beneficiaries reach it in the hundreds of thousands.
Income trapped at the estate or trust level is taxed at rates a beneficiary would rarely hit. Distributing that income out to beneficiaries often moves it into a far lower bracket. But you can only do that if distributions are actually made — and made in the right tax year.
Timing is the other lever. If a 401(k) distribution lands in the estate in one tax year and the deductions land in the next, they do not offset each other. An estate can also elect a fiscal year rather than the default calendar year, which allows income and expenses to be pulled into the same period. (Trusts cannot elect a fiscal year on their own, though there is an election that lets a qualifying trust be treated as part of the estate.)
This is the area where legal and tax work genuinely have to be done together. It is also where a great deal of avoidable tax gets paid.
Why the IRS Is a “Super Creditor”
The IRS holds a priority position against most ordinary creditors and has an automatic lien on estate assets.
If you are serving as personal representative in Florida — or as trustee, or as executor in another state — and you distribute assets to beneficiaries or pay other creditors before satisfying the IRS, you can be held personally liable for the tax.
Not the estate. You. That is the reason a careful administration investigates the tax position before money moves, files what needs to be filed, and sequences payments correctly.
What Is Step-Up in Basis?
Step-up in basis resets the tax cost of an inherited asset to its fair market value on the date of death, which eliminates all capital gain that accrued during the owner’s lifetime. It is one of the most valuable provisions in the tax code for ordinary families.
An example:
- A Florida home purchased for $150,000
- Worth $450,000 on the date of death
- $300,000 of capital gain — erased
Whoever inherits it — spouse, children, heirs — takes it with a new basis of $450,000. Sell it soon after, and there is little or no gain to report. Hold it as it continues to appreciate, and the gain is measured only from the date-of-death value forward.
For a family with no federal estate tax exposure, this is pure benefit. For a $40 million estate paying 40% estate tax, it softens one side of a difficult picture.
What Does Not Get a Step-Up
Retirement accounts get no step-up in basis. A traditional IRA or 401(k) is what the code calls income in respect of a decedent — income the decedent had earned but not yet been taxed on. Every dollar that comes out is taxable to whoever receives it. (Roth accounts are the exception: qualified distributions come out tax-free.)
Gifts made during your lifetime get no step-up either. This one causes real damage. A parent who no longer uses a rental property deeds it to an adult child, reasoning the child will inherit it anyway. The child takes the parent’s original basis — and inherits the entire built-in capital gain along with the property. Waiting and transferring it at death would have eliminated that gain completely.
There are legitimate reasons to make lifetime gifts. Losing a step-up by accident is not one of them. Do not transfer an appreciated asset without getting tax advice on what the transfer costs.
Adding someone to a deed creates a related problem: when the original owner dies, how much of the property gets stepped up depends on how title was held and what the transfer actually accomplished. The answer is frequently “less than the family assumed.”
Married Couples: Half Step-Up vs. Double Step-Up
Here is a question that came up during the webinar and deserves its own answer.
A Florida couple owns a home jointly. They paid $150,000; it is worth $450,000. When the first spouse dies, only half the property is stepped up. The surviving spouse’s half keeps the original basis. If the survivor sells, half the gain is erased, and half is not.
In a community property state, both spouses are treated as owning the entire asset, so the first death produces a full — “double” — step-up on the whole property.
Florida is not a community property state, but the Florida Community Property Trust Act (Chapter 736, Part XV, effective July 1, 2021) allows married couples to hold property in a special trust designed to mimic that treatment and obtain a double step-up. It is a relatively new tool that has not been extensively tested, and it carries trade-offs that need to be weighed against the potential tax savings. For couples holding highly appreciated Florida real estate, it is worth understanding.
The Hidden Tax Trap in IRAs and 401(k)s
Retirement accounts are where the largest, most avoidable tax bills get created — because the rules changed, and a lot of families are still operating on the old ones.
The 10-year rule. Under the SECURE Act, most non-spouse beneficiaries must empty an inherited retirement account within 10 years. The old “stretch” — distributions over the beneficiary’s own life expectancy — is gone for most people.
Who still gets longer. A limited group of eligible designated beneficiaries is exempt from the 10-year rule, including a surviving spouse, a disabled or chronically ill beneficiary, a beneficiary not more than 10 years younger than the account owner, and the account owner’s own minor child. A minor child uses the stretch until age 21 and then has 10 years — effectively until 31.
Spouses have the best option available. A surviving spouse can roll an inherited IRA into their own IRA rather than an inherited IRA. For a younger surviving spouse, that can extend the tax deferral by decades.
Every dollar out of a traditional IRA or 401(k) is ordinary income — taxed at regular rates, not the preferential capital gains rates. Cashing out an inherited account in a single lump sum can push a beneficiary into the top bracket for one year and cost far more than spreading distributions across the 10-year window. In a year with offsetting losses or unusually low income, taking more may make sense. That is a conversation for your CPA and financial advisor, with your specific numbers in front of them.
Never name your estate as the beneficiary of a retirement account, and never leave the beneficiary designation blank. Both outcomes route the account through probate. You lose the 10-year stretch, the account becomes exposed to creditors of the estate, and the payout window can collapse to five years — meaning the probate would have to stay open that long. Name a person, or name a properly drafted trust.
Owning Property Outside Florida
Two separate problems follow out-of-state property.
Another state’s estate tax. A person can live in Florida, die in Florida, and be Florida in every respect — and still owe estate tax to Pennsylvania, or another state that imposes one, on property located there. A handful of states impose an inheritance tax as well, charged to the person receiving the property. Sometimes no tax is due but a return is still required. And while extensions are commonly available for filing, they are generally not available for paying — miss the payment date and penalties and interest follow.
Ancillary probate. Real property titled in the decedent’s individual name — no joint owner with rights of survivorship, not held in an LLC, not titled in a trust — generally requires a probate in the state where it sits. Some states require a Florida probate be opened first. That can add months before a sale or distribution, while the carrying costs on the property keep running.
This is why “what do you own, and how is it titled” is not a paperwork question. It determines how many court systems your family has to work through.
The Mistakes That Cost the Most
- Gifting an appreciated asset during life and destroying a step-up that would have been free at death.
- Missing the portability election — no return filed for the first spouse because none was required.
- Not filing Form 1041, or filing it without any thought to timing, and paying top-bracket rates on income that should have been distributed.
- Cashing out an inherited IRA in a lump sum instead of rolling it into an inherited IRA or a spousal IRA.
- Assuming no Florida estate tax means no tax obligations at all — and overlooking federal filings, out-of-state property, and income earned during administration.
Proactive Planning Is the Protection
- Name a living beneficiary on every retirement account. Never your estate, never blank.
- Get a date-of-death appraisal. A step-up in basis is only as good as your ability to prove the date-of-death value. “It was worth about $200,000” is not evidence.
- Use trusts to control how and when assets pass — and how they are taxed along the way.
- File the portability election, and if you think you missed it, check again. The window is five years, not nine months.
- Review your plan. Estate planning is not static. Documents drafted a decade ago and left in a drawer are how the wrong people end up in charge and the wrong people end up with the assets.
“I’ve seen disasters happen when people do documents, put them in a drawer, and never look at them again, and the wrong people get your assets and the wrong people are in charge.”
Who Should Be Paying Close Attention
- Families currently administering an estate — whether through probate, through a trust, or through assets passing outside probate entirely. The tax issues are identical in all three; they are simply harder to catch when no probate is open to force the question.
- Trustees managing an ongoing trust, who carry personal exposure for getting the tax sequence wrong.
- CPAs and financial advisors whose clients are working through these issues and need estate-specific guidance alongside their tax work.
Frequently Asked Questions
Does Florida have an estate tax? No. Florida’s estate tax was eliminated for deaths after December 31, 2004. Florida also has no inheritance tax and no state income tax. Federal estate tax and federal income tax still apply.
Does Florida have an inheritance tax? No. Florida imposes no inheritance tax. A small number of other states do, and a Florida resident who inherits property located in one of those states may owe tax there.
How much can you inherit in Florida without paying taxes? There is no Florida tax on an inheritance of any size. At the federal level, the 2026 estate tax exemption is $15 million per person. The tax is assessed against the estate, not the person inheriting.
Do I have to pay capital gains tax on a house I inherited in Florida? Generally not on the appreciation that occurred during the decedent’s lifetime — step-up in basis resets the property’s tax basis to its date-of-death fair market value. You may owe capital gains tax on appreciation between the date of death and the date you sell.
Do I have to file a tax return for someone who died? Usually yes. A final Form 1040 is required for the decedent’s last year if they met the filing threshold. If the estate or trust earns income during administration, a Form 1041 is also required.
How long do I have to file a portability election? Nine months from the date of death, with a six-month extension available. Estates not otherwise required to file a federal estate tax return may use the IRS safe harbor under Rev. Proc. 2022-32 to elect portability up to five years after the date of death.
What happens if I name my estate as my IRA beneficiary? The account passes through probate, loses the 10-year payout available to a designated beneficiary, becomes reachable by creditors of the estate, and may be subject to a five-year payout requirement — which would keep the probate open that long.
Watch the Full Webinar Replay
This article covers the core rules, but the live session goes further, including audience questions about real situations that don’t fit neatly into an article. If you’d rather watch than read, here’s the full “Death & Taxes” webinar replay with Samantha Fitzgerald.
Talk Through Your Situation
Every estate is different, and a single detail can change the outcome entirely. If you are working through one of these situations, there are two ways to start:
Currently navigating a probate or trust administration? Book a free case review. We will look at the specific circumstances and give you strategies for where to go from there.
Need your own estate planning done or reviewed? Book a complimentary consultation. No cost, no obligation. You will leave understanding your options far better than when you came in.
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I was SO happy with SJF Law Group. They always take their time to explain ALL your options step by step. They take their time and guide you through all the steps, while explaining everything and answering all the questions. I would definitely recommend this firm to anyone. We had previously worked with other law firms but this really was the most helpful! – Mariam from Aventura, Florida
SJF Law Group is based in Plantation, Florida, and works with families throughout the state, including out-of-state trustees and personal representatives handling a Florida estate, trust, or property.
This article is educational and is not legal or tax advice for your specific situation. Tax figures are current as of September 2026 and change. Please consult your own attorney, CPA, or financial advisor, or contact SJF Law Group regarding your circumstances.
