Florida Basic Business Taxes 2010
Florida's economic development, finance and tax organizations provide a range of incentive programs to initiate new business and commercial investment. Specific programs include sales and tax exemptions, Qualified Defense and Space Contractor Tax Refund, and a Capital Investment Tax Credit.
Area Development Research Desk (Feb/Mar 10)
Corporate income tax:
Florida corporate income tax liability is computed using federal taxable income, modified by certain Florida adjustments, to determine adjusted federal income. A corporation doing business within and outside Florida may apportion its total income. Adjusted federal income is apportioned to Florida using a three-factor formula. The formula is a weighted average, designating 25 percent each to factors for property and payroll, and 50 percent to sales. Non-business income allocated to Florida is added to the Florida portion of adjusted federal income. An exemption of up to $5,000 is subtracted to arrive at Florida net income. Tax is computed by multiplying Florida net income by 5.5 percent.
Sales and use taxes:
Sales tax is 6 percent with a county option of 0-1.5 percent.
Florida offers sales and use tax exemptions on:
• Semiconductor, defense, and space technology-based industry transactions involving manufacturing equipment
• Purchases of machinery and equipment used by a new or expanding Florida business to manufacture, produce, or process tangible personal property for sale
• Labor, parts, and materials used in repair of and incorporated into machinery and equipment that qualify for sales tax exemption upon purchase (phased in over four years, 75 percent exempt on July 1, 2001)
• Electricity and steam used in the manufacturing process
• Aircraft parts, modification, maintenance and repair, sale or lease of qualified aircraft
• Commercial space activity - launch vehicles, payloads and fuel, machinery and equipment for production of items used exclusively at Spaceport Florida
• Labor component of research and development expenditures
• Any facility, device, fixture, machinery, or equipment required for pollution control, abatement, or monitoring of equipment used in manufacturing processing or compounding items for sale
• Machinery and equipment used for research and development
Real and tangible property is taxed, unless specifically exempt. Property is generally assessed at fair market value, but agricultural lands are assessed on their value as agricultural land. The tax is levied by cities, counties, school districts, and special districts. There is no state levy on real and tangible property.
Qualified Defense and Space Contractor Tax Refund (QDSC):
Florida is committed to preserving and growing its high technology employment base by giving Florida defense, homeland security, and space business contractors a competitive edge in consolidating contracts or subcontracts, acquiring new contracts, or converting contracts to commercial production. Pre-approved applicants creating or retaining jobs in Florida may receive tax refunds of $3,000 per net new Florida full-time equivalent job created or retained; $6,000 in an Enterprise Zone or rural county. For businesses paying 150 percent of the average annual wage, add $1,000 per job; for businesses paying 200 percent of the average annual salary, add $2,000 per job.
Capital Investment Tax Credit (CITC):
The Capital Investment Tax Credit is used to attract and grow capital-intensive industries in Florida. It is an annual credit, provided for up to 20 years, against the corporate income tax. The amount of the annual credit is based on the eligible capital costs associated with a qualifying project. Eligible capital costs include all expenses incurred in the acquisition, construction, installation, and equipping of a project from the beginning of construction to the commencement of operations.
Eligible projects are those that operate in designated high-impact portions of the clean energy, life sciences, financial services, information technology, transportation equipment manufacturing, and semiconductor sectors, as well as corporate headquarters. The project must create at least 100 jobs and invest at least $25 million in eligible capital costs. The level of investment and the project's Florida corporate income tax liability for the 20 years following commencement of operations determines the amount of the annual credit. Florida's corporate income tax rate is 5.5 percent of apportioned taxable income.
All business inventories are exempt from property taxation.
Goods in transit:
Goods in transit are exempt from property taxation up to 180 days.
Goods for export:
All goods manufactured or produced in the state for export outside the state are exempt from sales and use taxes.
Industrial fuels and raw materials:
Purchases of raw materials, non-reusable containers or packaging, boiler fuels used in production, and co-generation of electricity are exempt from sales tax.
Florida State Contact:
Enterprise Florida, Inc.
800 North Magnolia Avenue, Suite 1100
Orlando, FL 32803
Fax: (407) 956-5599
Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings.