Guest blogger: Florida Chamber of Commerce
On Friday, the Florida Department of Revenue announced a reduction in the corporate income tax rate from 5.5 percent to 4.458 percent retroactive to January 1, 2019. This follows the August announcement of $543.2 million in corporate income tax refunds that will be distributed in spring 2020. The reduced tax rate and refunds help offset collections from an expanded tax base which is helping pay for the federal Tax Cuts and Jobs Act of 2017 (TCJA).
The Florida Chamber of Commerce applauds the Florida Legislature for taking steps to ensure Florida continues to have one of the best tax climates in the country. The Florida Chamber Foundation 2030 Blueprint sets a goal of being the number one tax climate in the country by 2030 and these legislative actions indicate a commitment to remaining competitive.
With support from the Florida Chamber, lawmakers took steps during the 2018 legislative session to avoid an inadvertent tax increase and established a refund and rate cut mechanism in the event corporate income tax collections exceeded previous estimated revenue projections for the first two state fiscal years.
The new corporate income tax rate could see further reduction in January 1, 2020 and January 1, 2021 and will increase back to 5.5 percent after January 1, 2022 without legislative action.
The TCJA resulted in significant tax cuts to families and job creators at the federal level, however, in order to pay for a portion of these tax cuts, Congress removed certain tax exemptions and expanded the tax base. As a result, Florida’s corporate tax base would likewise expand, unless action was taken. Soon after passage of the TCJA, the Council on State Taxation estimated that the increase to Florida’s tax base could be 13 percent – a significant increase in corporate income tax collections.
Unfortunately, not everyone in the legislature believes that Florida should remain competitive. Ahead of the 2020 legislative session, Representative Anna Eskamani (D-Orlando) has filed a bill repealing the corporate income tax refunds and rate reduction, effectively increasing taxes on Florida job creators.
Want More Tax Information?
The Department of Revenue has published several Taxpayer Information Publications (TIPs) with more information regarding the corporate income tax:
TIP #19C01-01 - Florida Corporate Income Tax - Tax Cuts and Jobs Act of 2017
TIP #19C01-02 - Florida Corporate Income Tax Adoption of Internal Revenue Code and Other 2019 Legislative Changes
TIP#19C01-03 - Florida Corporate Income Tax 2018 and 2019 Taxable Years Reporting of Additional Required Information
TIP #19C01-04 - Florida Corporate Income Tax 2019 Tax Rate Reduction
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