Retiring to Florida: what the move changes on the return

The thing a retiree gains by moving to Florida is simple to state: no state tax on Social Security, pensions, IRA and 401(k) withdrawals, interest, dividends or capital gains, because Florida has no individual income tax at all. The federal return does not change its mind about any of that income. The IRS taxes a Florida retiree exactly as it taxed the same person in Minnesota or New Jersey. So the move does not simplify the federal return; it removes the state one, and the saving is whatever the old state was charging on that income.

That removal has side effects, and they are where new Floridians make mistakes. State withholding keeps coming out of the pension until someone stops it. The federal SALT deduction loses its biggest component and has to be rebuilt from property tax and sales tax. The move year is split between two states, with the old one still entitled to part of it. And the state tax breaks that mattered in the old state, exemptions for pension income, credits for property tax, are replaced by a different set that runs through the county property appraiser instead of a tax return.

What stops being taxed

Most states that have an income tax give retirees something: a pension exclusion, a Social Security subtraction, an age-based credit. The deals vary and most have caps or income limits. Florida needs none of that machinery because nothing is taxed in the first place.

Roth conversions deserve a second look after the move. A conversion in a state with a 5% income tax costs 5% more than the same conversion in Florida. For a retiree who left a taxing state in 2026, the conversions that were put off because of the state tax can now be done at the federal cost alone, and the federal cost is what it always was.

The federal return is now the whole return

A Floridian files Form 1040 and nothing else. There is no state return to attach, no state estimated payment in April, June, September and January, and no state refund to wait for. For a retiree used to two returns a year, this is the practical change: one set of estimates, one deadline, one calculation.

The paperwork that follows a retiree, though, does not know about the move. Pension administrators and IRA custodians withhold state tax for the state on file, and will keep withholding for New York or Illinois after a move to Naples unless told to stop. The fix is a new Form W-4P for periodic pension payments and Form W-4R for one-time withdrawals, with the state election set to none. Any old-state tax withheld after the move is not lost; it comes back on the old state’s part-year return. But it is a loan to that state at no interest, and a reason to file a return that otherwise might not be needed.

Federal withholding is the other half. With no state tax to pay, some retirees let federal withholding lapse too and are surprised in April. Federal estimated payments are still owed when the balance after withholding will be more than $1,000, and the safe harbors, 100% of last year’s tax or 90% of this year’s, with 110% of last year’s for higher incomes, apply in Florida as everywhere. The easiest tool is withholding on an RMD: a withdrawal in December with enough federal tax withheld counts as if it had been paid evenly through the year.

The SALT line

The state and local tax deduction on Schedule A is the one federal line that moves because of the Florida address. In a taxing state, most of a retiree’s SALT deduction is state income tax. In Florida there is none, so the deduction is property tax plus either state income tax, which is zero, or state and local general sales tax, whichever the filer elects. A Floridian always elects sales tax, because the alternative is nothing.

The sales tax figure comes from the IRS optional tables, which estimate it from income, family size and the local rate, or from receipts. Big-ticket purchases, a car, a boat, building materials for a home, are added on top of the table amount, because the tables assume ordinary spending. The IRS calculator on its website does the arithmetic. For a retiree who bought a car in the year of the move, the sales tax on it alone can be a few thousand dollars.

The cap for 2026 is $40,400, phased back toward $10,000 for modified AGI above $505,000. Few Florida retirees reach it. The more common outcome is that the SALT deduction, without state income tax in it, is too small to make itemizing worthwhile. The 2026 standard deduction is $16,100 single and $32,200 joint, plus the additional amount for age 65 and older, plus the $6,000-per-person senior deduction that runs through 2028. A couple both over 65 would need well over $35,000 of property tax, sales tax, mortgage interest and charitable gifts before itemizing beats the standard deduction. In a taxing state, state income tax often got them there. In Florida, it usually does not.

The old state cannot follow the pension

Federal law since 1996 bars any state from taxing the retirement income of a person who is no longer its resident or domiciliary, however the pension was earned. A thirty-year New York teacher who retires to Sarasota owes New York nothing on the pension from the day she stops being a New York resident. The same protection covers IRA and 401(k) withdrawals and most deferred compensation paid out over ten years or more.

What the old state keeps is everything that is not retirement income and has a source there: rent from a house kept back home, a business still operating there, wages for days worked there, and the gain on an old-state property sold after the move. And the old state decides whether the person has really left. Its residency test, not Florida’s, is what matters, and the test is covered in Moving to Florida, and proving it to the state you left.

The move year

The year of the move is the last year with two returns. The old state gets a part-year return covering income received while the person lived there, plus any old-state-source income after the move. Florida gets nothing. The federal return is unchanged. The date that splits the year is the date domicile changed, usually the day the household actually relocated, and it should be the same date on the old state’s return, the Florida Declaration of Domicile, the driver’s license and the voter registration.

Retirees should look at the state boxes on every 1099-R and SSA-1099 for that year. Custodians change the state of record whenever the address changes, or whenever they get around to it, so the state withholding box often reflects the old state for the whole year, or the new state for months the person was not here yet. The part-year return claims back whatever the old state took after the move date.

What Florida gives seniors instead

Florida’s retiree benefits are on the property-tax bill, not a tax return, and they go through the county property appraiser. The homestead exemption takes up to $50,000 off the assessed value of a permanent residence: the first $25,000 against all levies, the second $25,000 against non-school levies only. Once granted, the Save Our Homes cap limits assessment growth to 3% a year or the CPI change, whichever is lower. The application, Form DR-501, is due March 1 of the year after the move, and the person must own and live in the home on January 1.

Owners 65 and older with household adjusted gross income at or below an indexed limit, $38,686 for 2026, can get an additional exemption of up to $50,000 against county and some city levies, where the county or city has adopted it. A long-term version, for owners 65 and older who have lived in the home 25 years and whose home is valued under $250,000, can exempt the whole assessed value where adopted. A sworn income statement goes to the property appraiser by March 1 the first year. Widows and widowers get a further $5,000 exemption. The full mechanics, including Amendment 3, approved in November 2026, which raises the non-school exemption to $150,000 for 2027 and $250,000 from 2028, are in Homestead and Save Our Homes.