How Does Florida Sales and Use Tax Work

The sales and use tax system is designed to ensure that all tangible personal property is taxed once it is used or consumed within Florida. If you purchase an item in Florida, you pay sales tax. If you purchase an item outside Florida and bring it into the state, you owe use tax

What is Florida Sales and Use Tax?

Florida Sales Tax is a consumption tax levied on the sale of most tangible personal property within the state. It’s generally collected by retailers at the point of sale and remitted to the Florida Department of Revenue. The standard Florida sales tax rate is 6%, but this can vary depending on local jurisdictions, with rates ranging from 6.3% to 8.3%. This is because counties and cities can add their own sales tax, called discretionary sales surtax.

Florida Use Tax is similar to sales tax but applies to tangible personal property purchased outside of Florida and brought into the state for use, storage, or consumption. In essence, it’s a tax on the privilege of using items in Florida without paying sales tax at the time of purchase.

What are the Key Differences Between Florida Sales and Use Tax

• Point of Collection: Sales tax is collected at the time of purchase, while use tax is typically self-reported and paid by the consumer.
• Location of Purchase: Sales tax applies to items purchased within Florida, while use tax applies to items purchased outside of Florida.

How Much Does Florida Charge for Sales Tax?

Florida’s base sales tax rate is 6%

However, the total amount you’ll pay can vary depending on where you make the purchase. Many counties and cities impose additional sales taxes, known as discretionary sales surtaxes. These surtaxes can range from 0.5% to 2.5%

Who Collects and Remits the Sales Tax in Florida?

• Sales Tax: Retailers are generally responsible for collecting sales tax from customers and remitting it to the Florida Department of Revenue.
• Use Tax: Consumers are responsible for calculating and paying use tax directly to the state. However, large businesses or frequent out-of-state purchasers may be required to register and collect use tax.

Factors Affecting Florida Sales and Use Tax:

• Local Jurisdiction: County, city, and district taxes can increase the overall sales and use tax rate.
• Exemptions: Certain items, such as groceries and prescription medications, are exempt from sales and use tax.
• Nexus: Businesses must have a physical presence (nexus) in Florida to collect sales tax.

What is Florida Discretionary Sales Surtax

A Florida discretionary sales surtax is an additional tax levied by individual counties on top of the state’s general sales tax. This extra tax is used to fund county-specific projects and services.The surtax rate differs between counties, ranging from 0.5% to 2.5%. Some counties may not impose a surtax at all. Also in most cases, the surtax applies only to the first $5,000 of a purchase.

How to Get a Florida Sales Tax Number

To obtain a Florida sales tax number, follow these steps:

1. Determine Eligibility: If your business sells taxable goods or services in Florida, you likely need a sales tax permit.
2. Register Online: Visit the Florida Department of Revenue website (floridarevenue.com) and use the online registration portal. This is the fastest and easiest method.
3. Complete Application: Provide business information, including name, address, and federal tax ID number.
4. Wait for Approval: Typically, you’ll receive your sales tax number within three business days.

Note: You can also register by mail using Form DR-1, but there’s a $5 fee.

Florida Sales and Use Tax Exemptions

While Florida imposes sales and use tax on most tangible personal property, there are several exemptions to be aware of.

Common Florida Sales Tax Exemptions List:

• Food: Most non-prepared food items, such as groceries and produce, are exempt from sales and use tax. However, prepared foods like candy, soda, and restaurant meals are typically taxable.
• Clothing: Most clothing items are exempt, but there are exceptions for luxury items and certain accessories.
• Medical Supplies: Prescription medications, medical equipment, and certain over-the-counter items are often exempt.
• Governmental Purchases: State, county, and municipal governments are generally exempt from sales and use tax on purchases for official use.
• Resale: Businesses purchasing items for resale are typically exempt from sales tax.

Important Considerations:

• Exemption Certificates: To claim an exemption, businesses often need to provide a valid exemption certificate to the seller.
• Nexus: The concept of nexus determines whether a business is required to collect sales tax. If a business has a physical presence in Florida (nexus), it generally must collect sales tax.
• Tax Holidays: Florida occasionally offers sales tax holidays on specific items, such as hurricane supplies or back-to-school items.

How is Sales Tax Calculated in Florida

Florida’s sales tax is calculated by combining a state-wide rate with additional county-level taxes. While the standard Florida sales tax rate is 6%, the total amount you pay can vary depending on local jurisdictions. Thus, to accurately determine or calculate the exact and total sales tax of an item, you’ll need to know both the state and county rates.:  

• State sales tax: A flat 6% on most taxable items.  
• County-level surtax: This varies by county and is added to the state sales tax.  

Example of How Sales Tax is Calculated in Florida

Let’s say you purchase an item priced at $100 in Miami-Dade County. Miami-Dade County has a 1% discretionary sales surtax.  

• Item price: $100
• State sales tax (6%): $100 * 0.06 = $6
• County surtax (1%): $100 * 0.01 = $1
• Total tax: $6 + $1 = $7 
• Total cost: $100 + $7 = $107

Important Considerations

• Rounding: Florida has specific rounding rules for sales tax calculations.  
• Exemptions: As mentioned earlier, certain items are exempt from sales and use tax.  
• Use Tax: If you purchase an item outside Florida and bring it into the state, you owe use tax, which is typically calculated the same way as sales tax.  

Note: For precise calculations, especially for businesses, using dedicated sales tax software is recommended.

How much is sales tax on a $20,000 car in Florida?

The sales tax rate in Florida for car purchases is 6%.   

For a $20,000 car, the sales tax would be:

$20,000 * 0.06 = $1,200

What is the penalty for paying sales tax late in Florida?

Paying sales tax late in Florida incurs a 10% late filing penalty of the total tax owed, with a minimum penalty of $50. This penalty applies even if no tax is due. Additionally, a floating rate of interest is applied to underpayments and late payments and this penalty can accumulate monthly, capped at 50% of the total tax owed.

Does Florida refund sales tax?

Yes, Florida does offer sales tax refunds under specific circumstances which are primarily for businesses, not individuals. The Florida Department of Revenue (DOR) is responsible for processing these refunds.

Understanding Florida Sales Tax Refunds Eligibility

There are several reasons why a business might be eligible for a Florida sales tax refund. Here are some of the most common:

• Calculation errors: Mistakes happen, and sometimes sales tax is miscalculated on a return. If you’ve overpaid sales tax due to a calculation error, you can file a claim for a refund.
• Duplicate payments: It’s also possible to accidentally pay sales tax twice on the same purchase. If this happens to you, you’re eligible for a refund of the duplicate payment.
• Payments on exempt items: Some purchases are exempt from sales tax in Florida. If you’ve paid sales tax on an exempt purchase, you can get a refund.

Understanding Florida Sales Tax Refunds Process (How do I claim my sales tax back in Florida? )

The general refund process to claim your sales tax back in Florida  typically involves the following steps:

• Identifying the overpayment: This could be due to calculation errors, duplicate payments, or other mistakes.
• Calculating the overpayment amount: Businesses need to maintain accurate records to accurately determine the amount of overpayment.
• Gathering supporting documentation: This may include completed application forms, copies of sales tax returns, invoices, receipts, and any other relevant documentation.
• Submitting a refund claim: The completed application and supporting documents should be submitted to the Florida DOR.
• Record-keeping: Businesses should maintain good records of sales tax payments and potential refund claims.

Common Sales Tax Refund Scenarios in Florida

Scenario 1: Overpayment of Sales Tax

If you’ve overpaid sales tax directly to the Florida Department of Revenue or a county tax collector, you can file an Application for Refund – Sales and Use Tax (Form DR-26S).   

Examples of common overpayment situations:

• Incorrect tax rate applied
• Duplicate payments
• Mathematical errors during tax calculation

Calculating the overpayment amount

Meticulous record-keeping is crucial for calculating the overpayment amount accurately. Businesses should review sales tax returns, invoices, and receipts to identify any discrepancies.

Gathering necessary documentation:

• Completed Application for Refund – Sales and Use Tax (Form DR-26S)
• Copies of sales tax returns showing the overpayment
• Supporting documentation (invoices, receipts, etc.)

Scenario 2: Sales Tax Paid on Exempt Purchases

Common exempt purchases:

• Resale items (goods purchased for resale)
• Government purchases
• Certain non-profit purchases (depending on the organization’s tax-exempt status)

Obtaining proper exemption certificates: 

Businesses that frequently make exempt purchases should obtain exemption certificates from qualifying customers. These certificates verify the exempt status of the purchase and help avoid sales tax collection errors.

Documenting exempt purchases

Businesses should maintain detailed records of exempt purchases, including the items purchased, the exemption certificate number, and the date of purchase.

Scenario 3: Erroneous Tax Collection

If a dealer collected sales tax in error, you should first seek a refund from them. If unsuccessful, you might be eligible for a refund from the state. 

Common erroneous tax collection mistakes:

• Taxing exempt items (e.g., groceries in most states, prescription medications)
• Applying incorrect tax rates (e.g., charging a higher tax rate than the one applicable in the specific location)

Identifying and calculating the amount of erroneously collected tax: 

Businesses need to carefully review their sales records to identify transactions where they incorrectly collected sales tax. They can then calculate the total amount of erroneously collected tax by summing up the sales tax collected on these transactions.

Maintaining detailed records of sales and tax collected: 

Accurate record-keeping is essential for identifying and claiming erroneous tax collections. Businesses should track all sales transactions, including the items sold, the sales tax rate applied, and the amount of sales tax collected.

Florida Sales Tax Time Limit

Refund claims must be filed within 3 years of the tax payment date.

What is the threshold sales tax in Florida?

Florida’s sales tax threshold for remote sellers is $100,000. This means out-of-state businesses must collect and remit Florida sales tax if their annual sales within the state exceed this amount. This threshold does not apply to sales made through marketplaces for individual sellers

Who charges sales tax in Florida?

In Florida, sellers are responsible for collecting sales tax on tangible goods and specific services. They then remit this tax to the state and local government authorities. Essentially, the seller acts as a tax collector on behalf of the government

Is Florida sales tax paid quarterly or monthly?

Florida sales tax is generally paid quarterly. However, businesses collecting more than $1,000 in sales tax per month must pay monthly while businesses collecting between $501 and $1,000 per month can file quarterly and businesses with lower-volume, qualify for less frequent filing. Thus, The specific filing frequency depends on the amount of sales tax collected

What is Florida Sales Tax Filing Schedule?

Sales Tax Collected	Filing Frequency	Due Date
$501 – $1,000	Quarterly	1st and late after 20th of the month following the quarter
$101 – $500	Semi-annually	1st and late after 20th of the month following the half-year
$100 or less	Annually	January 1 and late after January 20

Is there a limit on $5000 sales tax in Florida?

There is a $5,000 limit related to discretionary sales surtax. This means that the additional sales tax charged on top of the base state sales tax is capped at $5,000 for the total purchase price of tangible personal property.

However, this limit has specific conditions:

• Applies to tangible personal property (items you can see, weigh, or touch).
• Doesn’t apply to all sales (e.g., services, real property).
• Items must typically be sold as a set or unit to qualify.

Does Florida have a sales tax on food?

Florida does not tax most groceries, but prepared food and beverages sold in restaurants are subject to sales tax

Does Florida have sales tax on clothes?

Yes, Florida imposes sales tax on clothing. The state sales tax rate is 6%, but local jurisdictions may add an additional tax, bringing the total to as high as 7.5%.   

There are no specific exemptions or thresholds for clothing items in Florida, unlike some other states. Additionally, while there might be occasional sales tax holidays for specific clothing items, these are temporary events and do not apply year-round.

What is the sales tax in Florida for tourists?

The sales tax for tourists in Florida is typically between 9% and 12%. This includes the state sales tax of 6% plus an additional local tax called Tourist Development Tax (TDT) that ranges from 3% to 6% depending on the county.

Common Florida Sales Tax Exemptions

• Homestead Exemption: Reduces property taxes for primary residences.
• Disabled Veterans Exemption: Additional exemption for veterans with disabilities.
• Senior Citizen Exemption: Tax relief for homeowners aged 65 or older.
• Save Our Homes Assessment Limitation: Caps annual increases in assessed home values

Other Potential Exemptions

Depending on specific circumstances, you may qualify for additional exemptions, such as those for:

• Disabled individuals
• Blind individuals
• Widows or widowers
• Agricultural property

Conclusion

Because of its complex nature, understanding the workings of sales tax in Florida is important for anyone who either runs a business in Florida or is a consumer. Additionally, aspects such as exemptions and tax holidays make the Florida sales tax system even more complicated. Therefore, businesses must completely go through the sales tax collection method in Florida to avoid penalties and fines.