Tax Policies South Florida Businesses Should Pay Attention To Ahead Of 2024 Election
Business leaders in South Florida are closely watching the 2024 elections as they are likely to have a significant impact on corporate tax.
In fact, almost half of the tax leaders surveyed (44%) in BDO’s 2024 Tax Strategist Survey believe the election outcome will pose significant challenges to their business.
The policy changes implemented by the next president may affect changes to corporate tax rates, customs and trade regulations, incentives and credits, and IRS funding. Not to mention the tax provisions that are set to sunset in 2025, such as the reduced statutory income tax rates introduced by the 2017 Tax Cuts and Jobs Act.
Given Florida’s unique tax landscape, it’s essential for local businesses to grasp how federal-level changes can impact them.
Issue #1: Inflation Reduction Act
Tax leaders surveyed by BDO say the number-one tax policy issue they are watching this election season is changes to certain Inflation Reduction Act (IRA) clean energy subsidies (44%). As a leader in clean energy, Florida is among the states with the greatest interest in the subsidies and the changes in tax policy they may entail. The outcome of the upcoming election could result in policy changes that impact or eliminate renewable energy subsidies first introduced in the 2022 IRA.
Many businesses have already integrated these credits into their long-term investment strategies, especially drawn to the ability to transfer or sell credits that the IRA introduced. In Florida, the IRA can help businesses offset the costs of adopting clean energy technologies through tax credits and incentives, including a tax credit up to $5 per square foot for commercial building owners to support energy efficiency improvements that deliver lower utility bills. Other programs that will benefit small businesses include tax credits covering 30% of the costs of installing low-cost solar power and of purchasing clean trucks and vans for commercial fleets.
Issue #2: Corporate Tax Rate Changes
The second issue tax leaders are following for the 2024 election are federal corporate tax rate changes (42%). Florida has a relatively low corporate tax rate (5.5%) compared to other states, and it imposes no personal state income tax, which offers businesses of all sizes and industries a very favorable tax structure. In 2023, Florida was already the number one destination for corporate relocations, with 86% more corporations moving their headquarters here than moving out, according to Securities and Exchange Commission (SEC) filings.
Essentially, any increase in federal corporate tax rates could incentivize businesses to relocate corporate headquarters to the Sunshine State. Businesses could benefit not only from the lower overall tax burden but also from other factors, such as a favorable business climate, access to skilled labor and proximity to major markets and shipping routes. Florida’s unique tax advantages position the state as a preferred destination for businesses aiming to optimize their tax strategy and operational efficiency.
Issue #3: International Tax And Trade Policy
Another important topic for tax leaders is international tax and trade policy, with 37% of survey respondents saying this issue will matter the most for their business in the 2024 election. The president has the authority to nominate the U.S. Trade Representative (USTR), a key cabinet-level position that plays a significant role in shaping and implementing U.S. trade policy.
A change in the USTR can signal shifts in trade policy priorities, including adjustments to trade agreements, tariffs and international trade relations. Florida’s economy relies heavily on exports, including goods like machinery, electronics, and agricultural products, and a new USTR, with a focus on expanding trade agreements or reducing trade barriers, could create new opportunities for the state’s more than 58,000 small and medium-sized enterprises that export goods.
Steps To Prepare For Potential Changes
With the upcoming election, it’s important to monitor possible outcomes when tax planning. While the future direction of tax policy is not yet clear, given that control of the White House and Congress is uncertain, business and tax leaders should stay informed about possible changes. They can achieve this by participating in professional groups, reviewing tax publications, and strategically using their networks and tax advisors in anticipation and preparation for policy and regulatory shifts.
By fostering preparedness and open communication, organizations can more effectively adapt to policy shifts and minimize disruptions to help manage the potential changes with confidence.
Source: DBR
