What Happens to Taxes During Florida Probate?

Florida charges no state estate tax and no inheritance tax, so taxes during Florida probate are almost entirely a federal matter. The personal representative is usually responsible for three possible returns: the person’s final income tax return, an income tax return for the estate itself if it earns $600 or more, and a federal estate tax return, which in 2026 applies only to estates above $15 million. Taxes generally have to be handled before beneficiaries receive their inheritance.

Does Florida Have an Estate Tax or Inheritance Tax?

No, and this is the single biggest tax advantage of settling an estate in Florida.

• No state estate tax. Florida’s estate tax was tied to a federal credit that Congress eliminated. According to the Florida Department of Revenue, a federal change eliminated Florida’s estate tax for people who died after December 31, 2004.
• No inheritance tax. Florida has never taxed beneficiaries on what they receive. Article VII, section 5 of the Florida Constitution limits any state death tax to that repealed federal credit, so the legislature cannot simply reinstate one.
• No state income tax, which also means the estate owes no Florida income tax on what it earns during administration.

One practical update worth knowing: beginning July 1, 2023, personal representatives no longer have to file an Affidavit of No Florida Estate Tax Due (Form DR-312) or the version used when a federal return is required (Form DR-313). That paperwork step is gone for most estates.

Watch for one exception. If the person owned property in a state that does levy an inheritance tax, that state may still want a return.

What Tax Returns Does a Personal Representative Have to File?

Up to three separate federal returns can come into play, and they do different jobs:

• Final Form 1040. This reports the person’s income from January 1 through the date of death. It is filed like any other individual return and is generally due April 15 of the following year.
• Form 1041, the estate’s income tax return. This covers income the estate earns after the date of death, such as interest, dividends, or rent.
• Form 706, the federal estate tax return. This is a tax on transferring wealth at death, not on income, and very few estates need it.

These are three different returns with three different purposes. Confusing the estate’s income tax return with the federal estate tax return is one of the most common mix-ups families run into.

When Does an Estate Need to File Form 1041?

An estate must file Form 1041 if it has $600 or more in gross income for the tax year, or if any beneficiary is a nonresident alien. The IRS explains the requirement here.

A few details that matter:

• The estate needs its own tax ID. Before filing, the personal representative applies for an Employer Identification Number for the estate. The estate cannot keep using the deceased person’s Social Security number.
• The $600 threshold is annual. If the estate stays open across two tax years, you test the threshold each year.
• It is easier to cross than people expect. A single brokerage account paying modest dividends, or a rental property collecting a few months of rent, can clear $600 quickly.
• Calendar-year estates file by April 15. The personal representative may instead elect a fiscal year, which can shift the deadline.
• Beneficiaries get a Schedule K-1. Income the estate distributes is reported to beneficiaries on Schedule K-1, and they report it on their own returns.

Mark the last return as a final return when the estate closes, or the IRS will keep expecting filings.

Who Actually Pays Federal Estate Tax in 2026?

Almost no one. For 2026, the federal estate tax exemption is $15 million per person, or $30 million for a married couple who use portability. That figure came from the One Big Beautiful Bill Act, signed July 4, 2025, which replaced the scheduled reduction that had been expected at the end of 2025 and set the amount permanently, indexed for inflation after 2026. The top rate on amounts above the exemption is still 40 percent.

For the overwhelming majority of Central Florida families, that means no federal estate tax and no Form 706. Estates that should still look closely include those holding significant real estate, business interests, or concentrated investments, and married couples who want to preserve the first spouse’s unused exemption, which requires filing a return to elect portability even when no tax is owed.

Do Beneficiaries Pay Tax on an Inheritance in Florida?

Receiving an inheritance is generally not taxable income. There are a few situations where a tax bill still shows up:

• Inherited retirement accounts. Distributions from a traditional IRA or 401(k) are taxable income to the beneficiary in the year received. Roth accounts are treated differently.
• Income the estate earned. Anything reported to you on a Schedule K-1 goes on your return.
• Selling appreciated assets. Inherited property generally receives a new cost basis equal to its fair market value on the date of death. If you later sell for more than that value, the gain is taxable. Because of that step-up, a home worth $200,000 when purchased and $500,000 at death is generally treated as having a $500,000 basis.

How Are Taxes Paid Before Beneficiaries Are Paid?

Florida law sets a strict order for paying an estate’s expenses and debts in section 733.707, Florida Statutes. Taxes sit high on that list. Class 1 covers costs and expenses of administration and professional fees. Class 3 covers debts and taxes that have preference under federal law, ahead of most ordinary creditors.

The practical takeaway for a personal representative: do not distribute the estate early. A personal representative who pays beneficiaries and leaves taxes unpaid can end up personally responsible for the shortfall. Most people work with a probate attorney and a CPA to confirm every return is filed before closing the estate.

Frequently Asked Questions

Does Florida tax my inheritance?

No. Florida has no inheritance tax and no state estate tax, so you owe the state nothing simply for inheriting.

Do I need an EIN for the estate?

Yes, if the estate must file Form 1041 or open an estate bank account. You can apply through the IRS.

When is the federal estate tax return due?

Form 706 is generally due nine months after the date of death, with an available extension. It applies only to estates above the exemption.

Can the estate deduct probate expenses?

Some administration expenses are deductible on the estate’s income tax return or the estate tax return, but not both. A CPA can allocate them correctly.

What if the estate owes taxes but has no cash?

The personal representative may need to sell assets to pay them. Taxes generally must be satisfied before beneficiaries receive distributions.

Getting the Tax Side of Probate Right

Florida’s lack of a state estate tax makes probate simpler here than in most states, but the federal filings still carry real deadlines and real personal exposure for the person in charge. If you are serving as a personal representative in Seminole County or anywhere in Central Florida, the probate attorneys at Vollrath Law can coordinate with your tax professional and keep the estate on schedule. Contact our office to talk it through.

This article is for general information only and is not legal or tax advice. Tax outcomes depend on the specific assets, income, and circumstances of each estate. Consult a qualified tax professional about your situation.