Florida is the southeasternmost U.S. State, with the Atlantic Ocean on one side and the Gulf of Mexico on the other. It has hundreds of miles of beaches. The city of Miami is known for its Latin-American cultural influences and notable arts scene, as well as its nightlife, especially in upscale South Beach. Orlando is famed for its theme parks including Walt Disney World.

Florida is the flattest state in the United States. Lake Okeechobee is the largest freshwater lake in the state.

Central Florida is known as the lightning capital of the United States, as it experiences more lightning strikes than anywhere else in the country. Florida leads the United States in tornadoes per area (when including waterspouts), but they typically do not reach the intensity of those in the Midwest and Great Plains. Hail often accompanies the most severe thunderstorms. Hurricanes pose a severe threat each year during June 1 to November 30, hurricane season, particularly from August to October.

Business Climate

The state’s economy relies mainly on tourism, agriculture, and transportation, which developed in the late 19^th century. Florida is also renowned for amusement parks, orange crops, winter vegetables, the Kennedy Space Center, and as a popular destination for retirees.

Tourism makes up one of the largest sectors of the state economy. Amusement parks, especially in the Greater Orlando area, make up a significant portion of tourism. The Walt Disney World Resort is the most visited vacation resort in the world. Many beach towns are popular tourist destinations, particularly during winter and spring break.

Agriculture is the second largest industry in the state. Citrus fruit, especially oranges, are a major part of the economy, and Florida produces the majority of citrus fruit grown in the United States. Other products include sugarcane, tomatoes, and celery. The state is the largest producer of sweet corn and green beans in the U.S. Florida is the largest producer of watermelons in the country. It also produces the most tomatoes, strawberries and sugar.

Phosphate mining, concentrated in the Bone Valley located in central Florida, is the state’s third-largest industry. Florida currently contains the largest known deposits of phosphates in the U.S. The state produces about 75% of the phosphate required by farmers in the U.S. and 25% of the world supply, with about 95% used for agriculture and 5% used for other products.

Tax Climate  

Florida does not have an individual income tax.

The state imposes a corporate income/franchise tax on all corporations for the privilege of conducting business within the state of Florida. The top corporate income tax rate is 5.5%. In general, corporations engaged in multistate business activities are required to apportion income to Florida. The apportionment fraction is based on the total of the property factor (25%), the payroll factor (25%) and a double weighted sales factor (50%).

Florida adheres to the cost of performance sourcing rules for sales of services.

Sales Tax Structure

The state sales tax rate is 6%, and ranks 16^th in the nation.

Despite recent activity in many states regarding economic nexus in light of South Dakota v. Wayfair, Florida has not enacted economic legislation as yet.

Florida is favorable to taxpayers in its approach to taxation of technology products for sales tax purposes. All digital products are exempt. Prewritten and custom computer software that is electronically downloaded is exempt. Only software sold in tangible form is taxable. Lastly, all cloud services are exempt. How products are produced, sold and delivered is critical to determining their tax status.

Last year, Florida had two sales tax holidays. Residents could buy disaster preparedness items free of sales tax in the beginning part of June. For more information on last year’s sales tax holidays, click here. Residents could also buy clothing and school supplies in early August tax free. For more information on last year’s Disaster preparedness holiday, click here. This year, legislation authorizing sales tax holidays has not yet been approved.

Random Facts

• Florida’s $1.0 trillion economy is the fourth largest in the United States. If it were a country, Florida would be the 16th largest in the world, and the 58th most populous.
• Port Miami is the world’s largest cruise ship port.
• I-10, which spans 362 miles in Florida, traverses the panhandle, connecting Pensacola, Tallahassee, Lake City, and Jacksonville, with interchanges with I-75 in Lake City and I-95 in Jacksonville. It is the southernmost interstate in the United States terminating in Santa Monica with a total length of 2,460 miles.
• Florida is home to Gatorland, the Alligator capital of the World.
• The Florida Everglades is the only place on the planet where crocodiles and alligators live together.
• The highest point in Florida is Britton Hill on the Florida Panhandle and is only 345 feet above sea level.
• Saint Augustine is the oldest European settlement in North America.
• Key Largo is known as the Dive Capital of the World.
• Fort Lauderdale is known as the Venice of America because the city has 185 miles of local waterways.

Have a tax question? Contact Monika Miles.