FL – Community contributions credit cap increased, live local contributions credit created

Florida increased the cap on the corporate income tax community contributions credit from $14.5 to $25 million for the 2023-2024 fiscal year. It also created a new income and insurance premiums tax credit for contributions to the Live Local Program, effective for tax years beginning on or after January 1, 2023. The program provides financing for affordable low-income housing projects. Taxpayers contributing to the program cannot pick a specific project, property, or geographic area in Florida.

How Much Is the New Credit?
The credit equals 100% of the taxpayer’s contribution. Corporate income taxpayers claiming the credit must:

addback the amount of the credit to federal taxable income;

apply the credit to income tax liability after other Florida credits that the taxpayer can claim; and

reduce the credit by the difference between the taxpayer’s federal corporate income tax with and without the credit.

Corporations that file a Florida consolidated return as an affiliated group member can claim the credit on a consolidated basis.

Insurance premium taxpayers can claim the credit after applying other credits, including:

the workers’ compensation administrative assessments credit;

the firefighters’ pension trust fund credit;

the municipal police officers’ retirement trust fund credit;

the credit for corporate income tax paid by the insurer; and

the salary tax credit.

Florida caps total tax credits at $100 million each fiscal year.

The credit does not reduce the amount of a corporation’s or insurer’s Florida estimated tax liability. But a corporation or insurer can apply the credit to determine if it meets the safe harbor exception to an estimated tax underpayment penalty.

How Do Taxpayers Apply for the New Credit?
Taxpayers can submit a credit application to the Florida Department of Revenue beginning October 1, 2023. The department will approve credits on a first-come, first-served basis.

Is the New Credit Refundable?
The credit is nonrefundable.

Can Taxpayers Carryforward Unused Credits?
Taxpayers can carryforward unused credits for up to 10 tax years.

Can Taxpayers Transfer the New Credit?
A taxpayer cannot transfer or assign the credit, except to:

another business if the taxpayer also transfers or assigns all its assets in the same transaction; or

another affiliated group member.

The taxpayer must notify the state of its intent to transfer or assign the credit to another affiliated group member. Ch. 2023-17 (S.B. 102), Laws 2023, effective as July 1, 2023