Florida Credits and Incentives Major Programs Update – Tax Credits Repealed

Florida Gov. Ron DeSantis signed H.B. 5 on May 31, 2023, to repeal several tax credit programs, including credits against numerous Florida business taxes. The following six programs are repealed effective July 1, 2023:   

• Qualified target industry tax refund program. 
• Quick action closing fund program. 
• New markets tax credit program.
• Entertainment industry tax credit program.   
• Qualified defense contractor and space flight tax refund. 
• Corporate income tax credit for spaceflight projects program. 

Although those tax credit programs have been repealed, any existing contracts or agreements authorized under them before July 1, 2023, will be continued. 

The bill also consolidates the responsibilities and resources of Enterprise Florida Inc. into the Department of Economic Opportunity (DEO) with the combined unit renamed the Department of Commerce and the Secretary of Economic Opportunity renamed the Secretary of Commerce.  This alert briefly summarizes each program.

Qualified Target Industry Tax Refund Program 

The qualified target industry tax refund was established in 1995 to encourage Florida communities to create high-skill jobs, establish corporate headquarters, and grow other target industries. The program provided a tax refund of $3,000 per new job created in Florida by expanding existing Florida businesses ($6,000 per job in an enterprise zone or rural county). A project was required to create at least 10 new jobs paying an average annual wage of at least 115% of the statewide average wage. A business was eligible for a $1,000 per-job bonus if it paid over 150% of average wages in the area and a $2,000 per-job bonus if over 200%. Projects were required to be supported by local communities, which funded 20% of the incentive. 

Quick Action Closing Fund Program 

The quick action closing fund was used to finalize negotiations for highly competitive projects. The program provided a discretionary grant to respond to unique requirements of wealth-creating projects. When Florida was vying for intensely competitive projects, the funds could be used to overcome a distinct quantifiable disadvantage after other available resources were exhausted. Funds were paid out based on specific project criteria outlined in a performance-based contract between the company and the state. The program has not been funded since fiscal 2018 and therefore has had no additional applications since then. 

New Markets Tax Credit Program 

In May 2009, then-Gov. Charlie Crist signed H.B. 485 to authorize the Florida new markets tax credit program. The program encouraged capital investment in low-income communities by allowing taxpayers to earn credits against federal income tax by investing in qualified community development entities that made investments in active, low-income community businesses. A person or entity that made a qualified investment earned a vested tax credit equal to 39% of the purchase price of the qualified investment. 

No new applications for the credit will be accepted as of July 1, but contracts and agreements executed before that date will continue. 

Entertainment Industry Tax Credit Program

The entertainment industry tax credit program (enacted in 2023 as part of H.B. 251) created Florida’s first production partnership program within the DEO. It provided a tax credit award for entertainment industry projects and authorized certified projects to relinquish tax credits to the Department of Revenue in exchange for specific payments. The program did not make it past the Regulatory Reform and Economic Development Subcommittee. It expired May 5, 2023, and is officially repealed as of July 1, 2023.

Qualified Defense Contractor and Space Flight Tax Refund 

In 1996, the legislature implemented the qualified defense contractor and space flight business tax refund program to create and retain high-quality, high-wage jobs in the defense and space industries. The program was a performance-based incentive tied directly to defense or space flight business contracts and was intended to preserve and grow Florida’s high-tech employment base. Pre-approved applicants that created or maintained jobs in Florida could receive tax refunds ranging from $3,000 to $8,000 per new full-time equivalent Florida job created. Applicants could also receive refunds on taxes paid related to the project. Up to 25% of the total refund could be taken per year as long as the business maintained employment and wage levels. 

Corporate Income Tax Credit for Spaceflight Projects Program 

The corporate income tax credit for spaceflight projects program provided certified spaceflight businesses with a nontransferable corporate income tax credit for up to 50% of the business’s tax liability. The maximum nontransferable tax credit amount that may be approved per taxpayer for a tax year was $1 million.