Florida is one of the few states that does not require employees to pay state income tax. While some city and local governments in other states mandate employees to pay city and local income tax, Florida does not require its employees to pay those taxes either. As a Florida employee, you are required to pay federal taxes, which are based on a percentage of your wages.
Residents of Florida do not have to pay income tax. That being said, they are still required to pay federal income tax, as well as Medicare and Social Security tax.
Medicare Tax & Social Security Tax
Medicare tax is a federal payroll tax that employers and employees in the United States pay. Your employer is supposed to withhold Medicare tax at the rate the federal government sets. Currently, you pay 1.45 percent of all your taxable wages for Medicare tax. Your taxable wages is your pay after your employer subtracts nontaxable deductions, such as a Section 125 medical or dental plan. If you do not have nontaxable deductions, all of your wages are subject to Medicare tax. Social Security tax is a federal payroll tax that employers and employees pay. The federal government sets the Social Security tax percentage and the annual wage limit. Currently, you pay 6.2 percent of your taxable wages for Social Security tax, up to $128,400 for the year.
Federal Income Tax
Federal income tax is a tax that the federal government levies on personal income. Your federal income tax withholding is based on the IRS withholding tax tables (Circular E) and your W-4 form data. Your employer obtains your filing status and allowances from your W-4 and uses the withholding tax table that matches your W-4 information, wages and pay period. This method is the wage bracket method, which gives a flat amount to withhold.
The other method is the percentage method. Your employer obtains your number of allowances from your W-4 and determines the total sum based on the amount the IRS gives for each allowance (see page 35 of IRS Circular E). Your employer subtracts your allowance sum from your wages after it subtracts nontaxable deductions and pretax deductions, such as a traditional 401k plan, from your gross pay. Then it uses the percentage method table relevant to your filing status, pay period and wages after allowances to figure your withholding.
Your employer is supposed to report your annual taxes withheld and wages earned to the Social Security Administration via Form W-2. Unlike employees in states that charge state income tax, your Florida employer does not have to file your W-2 with the state since you paid no state income tax. Therefore, when you file your tax return, you file it only with the IRS.
- Payroll Taxes: Florida
- IRS: Topic No. 751 Social Security and Medicare Withholding Rates
- IRS: Form W-4
- IRS: Circular E
- Patriot Software; What Are Taxable Wages?
- IRS. "Topic No. 751 Social Security and Medicare Withholding Rates." Accessed Oct. 24, 2020.
- Social Security Administration. "Social Security & Medicare Tax Rates." Accessed Oct. 24, 2020.
- Social Security Administration. "Social Security Administration Fact Sheet." Accessed Oct. 24, 2020.
- IRS. "Topic No. 602 Child and Dependent Care Credit." Accessed Oct. 24, 2020.
- IRS. "Tax Benefits for Education: Exclusions From Income." Accessed Oct. 24, 2020.
- IRS. "Publication 15 (2020), (Circular E), Employer's Tax Guide." Accessed Oct. 24, 2020.
- IRS. "Publication 525 (2019), Taxable and Nontaxable Income." Accessed Oct. 24, 2020.
- Pennsylvania Department of Revenue. "Personal Income Tax." Accessed Oct. 24, 2020.
- Urban Institute. "Individual Income Taxes." Accessed Oct. 24, 2020.
- Ohio Department of Taxation. "Municipal Income Tax Forms & Information." Accessed Oct. 24, 2020.
- Indiana Department of Revenue. "Departmental Notice #1." Accessed Oct. 24, 2020.
- Iowa Department of Revenue. "School District Surtax." Accessed Oct. 24, 2020.
- Iowa Policy Project. "Understanding Local Income Surtax In Iowa." Accessed Oct. 24, 2020.
Grace Ferguson has been writing professionally since 2009. With 10 years of experience in employee benefits and payroll administration, Ferguson has written extensively on topics relating to employment and finance. A research writer as well, she has been published in The Sage Encyclopedia and Mission Bell Media.