Florida has no state income tax — what it means for Canadian snowbirds

What "no Florida income tax" actually means

Florida's prohibition on state income tax is not just a policy choice — it's embedded in the Florida Constitution (Article VII, Section 5), which prohibits an income tax on individuals. This means Florida cannot levy state-level tax on:

• Employment income (wages, salaries)
• Pension and retirement income (including Canadian CPP, OAS, RRSPs, and RRIFs)
• Capital gains from property sales
• Investment income (dividends, interest)
• Rental income

For Canadian retirees who have already finished their working years, this is particularly beneficial: their pension, RRIF withdrawals, and investment income are untouched by Florida taxation regardless of how much time they spend in the state.

Canada still taxes you as a Canadian resident

The absence of Florida state tax does not change your Canadian tax obligations. Canada taxes its residents on worldwide income. As long as you remain a Canadian resident for tax purposes — which most snowbirds are — the CRA taxes your income regardless of where it was earned or where you spent the year.

Maintaining Canadian tax residency typically means: you have a Canadian home (owned or rented), Canadian spouse or dependants, Canadian bank accounts, provincial health coverage, and a clear intent to return to Canada. Snowbirds who spend 4–6 months in Florida each year easily maintain Canadian residency and face no risk of losing it.

Key Canadian tax considerations for snowbirds include filing Canadian tax returns annually, reporting any US-source income (such as Florida rental income) on your T1, and claiming the foreign tax credit for any US taxes paid.

The US federal Substantial Presence Test — the key risk

The SPT is a formula used by the IRS to determine whether a non-US citizen should be taxed as a US resident for federal purposes. The formula counts:

• 100% of days in the US in the current year
• 33% of days in the US in the prior year
• 16.7% of days in the US two years prior

If the total equals or exceeds 183 weighted days AND you spent at least 31 days in the current year in the US, you are deemed a US tax resident for federal purposes — subject to IRS taxation on worldwide income, same as a US citizen.

Practical example

A snowbird who spends 180 days/year in Florida for 3 consecutive years: 180 + (180 × 0.33) + (180 × 0.167) = 180 + 59.4 + 30.1 = 269 weighted days. Well above 183. This snowbird technically triggers SPT.

Most snowbirds avoid SPT in practice

Snowbirds spending 4–5 months (120–150 days) per year typically stay well under 183 weighted days. A 150-day stay: 150 + (150 × 0.33) + (150 × 0.167) = 150 + 49.5 + 25 = 224 days — this triggers SPT. Even a 4-month (120-day) stay: 120 + 39.6 + 20 = 179.6 — just below the threshold. So even 4-month-per-year snowbirds are close to the edge in their third year.

Form 8840 — the essential protective filing

IRS Form 8840 ("Closer Connection to a Foreign Country") allows you to claim an exemption from US tax residency even if you technically meet the SPT day count, provided you can demonstrate a closer connection to Canada. You must file Form 8840 annually with the IRS by June 15 (for tax year ending December 31).

When to file

File Form 8840 if you spent 31 or more days in the US during the tax year AND your weighted day count is 183 or more. Even if you're not sure you triggered SPT, filing is a low-cost protection measure. The form is free to file, short (2 pages), and requires no payment — it's purely a statement of connection to Canada.

What the form asks

Form 8840 asks you to demonstrate that your "tax home" is Canada — meaning you have a permanent home, your closer personal and economic relations are in Canada (family, social connections, business), and you maintain Canadian bank accounts, driver's license, and provincial health coverage. For genuine Canadian snowbirds, completing this form is straightforward.

Canada-US Tax Treaty

The Convention Between Canada and the United States of America with Respect to Taxes on Income and on Capital (commonly called the Canada-US Tax Treaty) prevents double taxation for individuals who are tax residents of both countries. The treaty includes "tiebreaker" provisions that determine which country has primary taxing rights when both claim a person as a resident. For Canadian snowbirds who maintain their Canadian home, Canadian family, and Canadian ties, Canada will win the treaty tiebreaker. US taxes paid are then creditable against Canadian taxes owed on the same income, preventing genuine double taxation.

No Florida estate tax — but US federal estate tax applies differently

Florida repealed its estate tax in 2004. However, the US federal estate tax applies to non-resident aliens (including Canadian snowbirds) on US-situs assets — Florida real estate, US bank accounts, US stocks — above a threshold of $60,000 USD (compared to the much higher threshold for US citizens and residents, which is currently $13.6 million). Canadian snowbirds with Florida real estate should consult a cross-border estate attorney about their estate tax exposure.

Sources

1. IRS — Substantial Presence Test
2. IRS Form 8840 — Closer Connection Exception Statement
3. CRA — Canada-US Tax Treaty
4. Florida Department of Revenue — floridarevenue.com