Florida’s Insurance Salary Tax Credit May Be Repealed
The Florida Senate passed legislation to repeal the Florida insurance salary tax credit (tax credit), which was designed to attract and retain insurance businesses and jobs in Florida. The tax credit provides relief against insurance premium taxes and fees for up to 15% of the salary of employees of the insurer who meet certain criteria.
If the tax credit is repealed, the Florida Insurance Council estimates insurers will be hit with a $300 million premium tax increase that will be passed on to businesses and ultimately individual policyholders through increased premiums across all lines of business. The bill’s sponsor, Republican Senator Anitere Flores, said insurance rates will likely increase regardless, and that no other businesses in the state receive what she referred to as “corporate welfare”.
Florida is one of only ten states that require insurance companies to pay corporate income tax and insurance premium tax. Those opposed to the bill say the tax credit helps equalize the higher tax burden with other Florida businesses and has made Florida more attractive for insurance companies. With insurance jobs climbing steadily higher than the national average, many fear repealing the tax credit could jeopardize Florida’s positive job growth in the insurance industry. Florida’s insurance industry currently provides more than 200,000 jobs and $13.4 billion in annual wages. With today’s technology, opponents believe insurance companies could easily relocate and perform the same functions in other cities and states with lower tax burdens.
Supporters of the bill agree that tax credits save businesses money, but are skeptical that this tax credit is entirely responsible for the increase in insurance jobs and believe that general economic conditions and other factors have a larger impact on the growth of Florida’s insurance industry. They also argue that the net tax increase generated by repealing the tax credit could be used to reduce other governmental fees, such as vehicle registration fees.
If the bill makes its way to the Governor’s desk, Florida’s insurance industry could see a significant impact.