Refunds Offset Collections from Expanded Tax Base Under Federal Tax Cut & Jobs Act
In a meeting of the Florida Revenue Estimating Conference (REC) today, state economists announced that Corporate Income Tax collections increased significantly during the last fiscal year, triggering a refund for corporate income tax payers.
The refunds help offset collections from an expanded tax base which is helping pay for the federal Tax Cuts and Jobs Act of 2017. The Florida Chamber of Commerce credits the Florida Legislature for taking steps to ensure Florida continues to have one of the best tax climates in the country.
“Two years ago, the Florida Legislature had the foresight to avoid an inadvertent tax increase on job creators which would have resulted following the implementation of the federal Tax Cut and Jobs Act of 2017,” said Carolyn Johnson, Florida Chamber of Commerce Business Climate Policy Director. “This not only signals that Florida is serious about being a top tax climate in the country, but allows businesses to continue to reinvest in their employees and their company to further strengthen Florida’s economy.”
According to the REC, the corporate income tax refund is approximately $543.2 million, and refunds will be distributed in spring 2020.
While some of the increases in corporate income tax collections could be attributed to increased economic growth, a significant portion of the increase is due to the expansion of the tax base resulting from the federal Tax Cuts and Jobs Act (TCJA) of 2017.
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 significante increase in corporate income tax collections.
With support from the Florida Chamber, the Florida Legislature 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.
Today’s meeting of the REC determined the net collections for FY 2018-2019 were substantially higher than previous estimates. Corporate taxpayers will receive an automatic refund on or before May 1, 2020 proportionate to the amount of corporate income tax paid during fiscal year 2018-2019. In addition to the automatic refunds, later this fall the Department of Revenue will determine a new 2019 corporate income tax rate based on today’s information.
Established in 1916 as Florida’s first statewide business advocacy organization, the Florida Chamber of Commerce is the voice of business and the state’s largest federation of employers, chambers of commerce and associations aggressively representing small and large businesses from every industry and every region. The Florida Chamber works within all branches of government to affect those changes set forth in the annual Florida Business Agenda, and which are seen as critical to secure Florida’s future. The Florida Chamber works closely with its Florida Political Operations and the Florida Chamber Foundation. Visit FloridaChamber.com for more information.