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Florida DOR Publishes Report on Impacts to Florida Taxpayers due to TCJA

Published: February 15th, 2019

By: H. French Brown, IV

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As previously discussed in multiple Dean Mead articles, the 2018 Florida Legislature did not have the time available to fully understand and estimate the impact from the 2017 Federal Tax Cuts and Jobs Act.  Therefore, the Legislature directed the Florida Department of Revenue to conduct an analysis of the impacts on Florida taxpayers. You can find links to our previous articles below.

Earlier this month, the Department published its findings to the Governor, President of the Senate, Speaker of the House of Representatives, and the public.  The full report may be found here – Examination of the Impact of the Tax Cuts and Jobs Act of 2017, dated February 1, 2019.

Ultimately, the Department highlighted 14 topics with significant impacts on Florida taxpayers. The key addition to this final report was the Department’s estimated fiscal impacts on each of the topics discussed.  While the Department’s fiscal impacts are not the official impacts approved by the Legislature, such impacts should provide a starting point for those discussions.

 

The fourteen topics and estimated fiscal impacts are listed below:

Topic 2019 Impact 5 Year Impact 10 Year Impact
Limitation on Net Interest Deductions $164M $875M $2.3B
Global Intangible Low-Taxed Income (GILTI) $112M $476M $1.1B
Foreign-Derived Intangible Income Deduction (FDII) (negative impact starting in 2022) $49M $150M ($601M)
Like-Kind Exchange $9M $68M $292M
Contributions to the Capital of a Corporation $2M $25M $60M
Bonus Depreciation ($231M) ($818M) ($587M)
Section 179 Expensing ($7M) ($22M) ($27M)
Transition Tax – Repatriation* $402M $1.7B $3.2B
Alternative Minimum Tax See Report, various options discussed
Net Operating Loss $88M $650M $1.7B
Domestic Production Activities Deduction $65M $321M $711M
Base Erosion and Anti-Abuse Tax (BEAT) $58M $520M $1.4B
Amortization of Research and Experimental Expenditures (begins in 2021) $0 $226M $869M
Participation Exemption for Dividends Received from Foreign Corporations ($249M) ($1.1B) ($2.1B)

 

* If the tax applied.  The Department has issued guidance providing that under current law, this new federal tax does not generally apply in Florida.

Please note, the Department of Revenue will present the findings contained in this final report to the Florida House of Representatives Ways & Means Committee on Tuesday, February 19th from 8:00 a.m. – 10:30 a.m.

If you have an interest in these issues, please contact the Dean Mead State and Local Taxation team.