The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Finance and Tax
BILL: CS/CS/SB 1390
INTRODUCER: Finance and Tax Committee; Commerce and Tourism Committee; and Senator Gruters
SUBJECT: Capital Investment Tax Credit
DATE: April 14, 2021 REVISED:
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Reeve McKay CM Fav/CS
2. Kim Babin FT Fav/CS
3. AP
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
CS/CS/SB 1390 amends s. 220.191, F.S., to expand an existing credit under the Capital
Investment Tax Credit (CITC) to include certain projects for the development or creation of
intellectual property, and to create three additional tax credits under the CITC relating to
intellectual property projects.
Additionally, the bill creates a new state corporate income tax credit, s. 220.197, F.S., for certain
taxpayers in the passenger car rental and leasing industry.
Capital Investment Tax Credit
The bill amends an existing credit under the CITC to include a project or projects that involve
the development or creation of intellectual property and that meet a certain average wage
requirement. For intellectual property projects only, the bill includes in the basis for calculating
the credit certain wages, salaries, employer-paid taxes and benefits, or other compensation paid,
as well as certain direct production costs.
The bill creates three new tax credits for qualifying businesses relating to intellectual property
projects:
 A credit for projects where the qualifying business makes one of three levels of cumulative
intellectual property investment ($50 million per year for 3 consecutive years, $150 million
BILL: CS/CS/SB 1390 Page 2
over 3 years, or $500 million over 3 years). The credit is calculated as 20 to 26 percent of
certain costs, depending on the investment level.
 A credit for projects that incur eligible production infrastructure costs, which are costs of
property intended to be used for the development of multiple intellectual property projects,
and which exceed $100 million during a period of up to 10 years.
 A credit for qualifying businesses establishing strategic priority projects, which are
intellectual property projects that demonstrate the potential for measurable value to Florida,
and for which the eligible capital costs are at least $75 million. The credit is calculated as 20
percent of the eligible capital costs generated by the project.
The three new credits are granted against the state corporate income tax, the state sales tax, or
both. The bill provides requirements and limitations for the use and transfer of credits and other
administrative provisions.
Creation of Tax Credit for Certain Passenger Car Rental and Leasing Businesses
The bill creates a new state corporate income tax credit, in the amount of $2 million and against
a taxpayer’s liability in its 2018 taxable year, if:
 The taxpayer’s business classification is in passenger car rental and leasing;
 The taxpayer deferred gains on the sale of personal property assets for federal income
purposes under s. 1031 of the Internal Revenue Code during its taxable year beginning on or
after August 1, 2016, but before August 1, 2017; and
 The taxpayer's final tax liability for its taxable year beginning on or after August 1, 2017, and
before August 1, 2018, before application of the new credit, is greater than $15 million and is
at least 700 percent greater than its final tax liability for its taxable year beginning on or after
August 1, 2016, and before August 1, 2017.
The credit applies retroactively to January 1, 2018.
The Revenue Estimating Conference has not yet determined the fiscal impact of the bill. Staff
estimates that the bill will significantly reduce state tax revenues.
The bill takes effect July 1, 2021.
II. Present Situation:
Select State Taxes
The following describes select Florida taxes, which the bill provides credits against.
BILL: CS/CS/SB 1390 Page 3
Corporate Income Tax
Florida imposes a tax on the taxable income of certain corporations and financial institutions
doing business in Florida.1 The current rate is 4.458 percent2 of a taxpayer’s net income for its
taxable year (the calendar or fiscal year or period upon which its net income is computed).3
The calculation of Florida corporate income tax starts with a corporation’s federal taxable
income.4 Taxable income earned by corporations operating in more than one state is taxed in
Florida on an apportioned basis using a formula based 25 percent on property, 25 percent on
payroll, and 50 percent on sales.5 Income that is apportioned to Florida using this formula is then
subject to the Florida income tax. The first $50,000 of net income is exempt, effective with
taxable years beginning January 1, 2013.6
Corporate income tax net collections in Fiscal Year 2019-2020 were $1.7 billion.7
Insurance Premium Tax
Florida imposes on insurers a tax on insurance premiums. For the tax imposed by
s. 624.509(1), F.S., tax is due on:
 Insurance premiums;
 Premiums for title insurance;
 Assessments, including membership fees and policy fees and gross deposits received from
subscribers to reciprocal or interinsurance agreements; and
 Annuity premiums or considerations.
The general tax rate is 1.75 percent of gross receipts on account of life and health insurance
policies covering Florida residents and on account of all other types of policies and contracts
covering property, subjects, or risks located, resident, or to be performed in Florida, minus
reinsurance and return premiums.8 Annuity policies or contracts held in Florida are taxed at
1 percent of gross receipts, and direct written premiums for bail bonds are taxed at 1.75 percent,
excluding any amounts retained by licensed bail bond agents or appointed managing general
agents.9 The insurance premium tax is collected by the DOR and distributed to the General
Revenue Fund.10 Total insurance premium tax collections in Fiscal Year 2019-2020 were
$893.7 million.11
1
Chapter 220, F.S.
2
The tax rate was adjusted downward to 4.458 percent pursuant to s. 220.1105, F.S., for taxable years beginning on or after
January 1, 2019. Pursuant to s. 220.1105(5), F.S., the rate is scheduled to return to 5.5 percent for taxable years beginning on
or after January 1, 2022.
3
Sections 220.11(2) and 220.63(2), F.S.
4
Section 220.12, F.S.
5
Section 220.15, F.S.
6
Section 220.14, F.S.
7
Revenue Estimating Conference, General Revenue Consensus Estimating Conference Comparison Report (December 21,
2020), 27, available at http://www.edr.state.fl.us/Content/conferences/generalrevenue/grpackage.pdf (last visited April 11,
2021).
8
Section 624.509(1), F.S.
9
Id.
10
Section 624.509(3), F.S.
11
Supra note 7, at 34.
BILL: CS/CS/SB 1390 Page 4
Sales and Use Tax
Florida levies a 6 percent sales and use tax on the sale or rental of most tangible personal
property, admissions,12 transient rentals,13 and a limited number of services, and a 5.5 percent
sales and use tax on commercial real estate rentals14 (state sales tax). Chapter 212, F.S.,
authorizes the levy and collection of the state sales tax, and provides exemptions and credits
applicable to certain items or uses under specified circumstances.15 Florida requires a dealer to
add the tax to the sales price of the taxable good or service and collect it from the purchaser at
the time of sale.16 Total sales tax collections in Fiscal Year 2019-2020 were estimated at
$29.3 billion.17
In addition to the state sales tax, county and municipal governments and school districts are
authorized to levy certain local discretionary sales surtaxes (also referred to as local option sales
taxes), subject to certain requirements and limitations.18
Capital Investment Tax Credit
The Capital Investment Tax Credit (CITC) was established by the Legislature in 1998 to attract
and grow capital-intensive industries in the state.19 The CITC is currently comprised of two tax
credits–one that is available for three categories of qualifying projects and that provides a credit
against the state corporate income tax or insurance premium tax20, and a second that is limited to
certain headquarters facilities and that provides a credit against the corporate income tax.21 Both
credits are granted to qualified businesses certified by the Department of Economic Opportunity
(DEO).
Credit under s. 220.191(2), F.S.
The first credit under the CITC is available for three categories of qualifying projects:22
 A new or expanded Florida facility that is in a designated high-impact sector23 and that
creates at least 100 new jobs in Florida (high-impact sector facilities).
12
Section 212.04, F.S.
13
Section 212.03, F.S.
14
Section 212.031, F.S.
15
Section 212.02(14)(a), F.S.
16
See ss. 212.07(2) and 212.06(3)(a), F.S.
17
Office of Economic and Demographic Research, The Florida Legislature, Florida Tax Handbook, Including Fiscal Impact
of Potential Changes, 159 (2020), available at http://www.edr.state.fl.us/Content/revenues/reports/tax-
handbook/taxhandbook2020.pdf (last visited April 11, 2021).
18
See ss. 212.054 and 212.055, F.S.
19
Chapter 98-61, Laws of Fla.
20
Section 220.191(2), F.S.
21
Section 220.191(3), F.S.
22
Section 220.191(1)(g) and (2)(a), F.S.
23
The sectors currently designated as high impact are clean energy, life sciences, financial services, information technology,
semi-conductors, transportation equipment manufacturing, advanced manufacturing, or a corporate headquarters facility. See
Department of Economic Opportunity, 2020 Annual Incentives Report, 53-54, available at
https://floridajobs.org/docs/default-source/reports-and-legislation/2019-2020-annual-incentives-report-
final.pdf?sfvrsn=af674ab0_2 (last visited April 11, 2021).
BILL: CS/CS/SB 1390 Page 5
 A new or expanded Florida facility that is in a qualified target industry24 and that creates or
retains at least 1,000 jobs in Florida, provided that at least 100 of those jobs are new, pay an
annual average wage of at least 130 percent of the average private sector wage in the area,
and result in a cumulative capital investment of at least $100 million (QTI facilities).
 A new or expanded Florida headquarters facility that is located in an enterprise zone and
brownfield area; that creates at least 1,500 jobs, which on average pay at least 200 percent of
the statewide average annual private sector wage; and that makes a cumulative capital
investment in this state of at least $250 million (headquarters facilities).
The annual credit amount is 5 percent of the eligible capital costs generated by the qualifying
project for up to 20 years,25 beginning with the commencement of operations of the project.26
The credit is granted against state corporate income tax liability or premium tax liability
generated by, or arising out of, the qualifying project. Annual limits for the tax credit apply,
depending on the type of qualifying project:
 For a QTI facility, annual credits against the state corporate income tax may not exceed
50 percent of the increased annual corporate income tax liability or the premium tax liability
generated by, or arising out of, the qualifying project.27
 For high-impact sector facilities and headquarters facilities, the annual credit limits depend
on the amount of cumulative capital investment resulting from the qualifying project:
o For a qualifying project resulting in a cumulative capital investment of at least
$100 million, the annual credit may not exceed 100 percent of the annual corporate
income tax liability or premium tax liability generated by, or arising out of, the qualifying
project.
o For a qualifying project resulting in a cumulative capital investment of at least
$50 million to under $100 million, the annual credit may not exceed 75 percent of the
annual corporate income tax liability or premium tax liability generated by, or arising out
of, the qualifying project.
o For a qualifying project resulting in a cumulative capital investment of at least
$25 million to under $50 million, the annual credit may not exceed 50 percent of the
annual corporate income tax liability or premium tax liability generated by, or arising out
of, the qualifying project.
A qualifying project with less than a $25 million cumulative capital investment is not eligible for
the credit.
24
The current qualified target industries are aviation and aerospace; corporate headquarters; clean technology; defense and
homeland security; financial and professional services; global logistics and trade; information technology; life sciences;
manufacturing; and research and development. See Department of Economic Opportunity, 2020 Annual Incentives Report,
12, available at https://floridajobs.org/docs/default-source/reports-and-legislation/2019-2020-annual-incentives-report-
final.pdf?sfvrsn=af674ab0_2 (last visited April 11, 2021).
25
For qualified target industry facilities, the tax credit period is limited to 5 years. See s. 220.191(1)(g)2., F.S.
26
Section 220.191(2)(a), F.S. Eligible capital costs include all expenses incurred in the acquisition, construction, installation,
and equipping of a project from the beginning of construction to the commencement of operations. They do not include the
cost of any property previously owned or leased by the qualifying business.
27
Section 220.191(1)(g)2., F.S.
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Generally, an unused credit may not be carried backward or forward to apply to tax liabilities in
previous or subsequent years, respectively.28 However, a business with a qualifying project
resulting in a cumulative capital investment of at least $100 million may apply unused credits
beginning with the 21st year after the commencement of the project’s operations and ending the
30th year after the commencement of the project’s operations.29
The credit may not be assigned or transferred, except by a qualifying business establishing a
qualifying project that includes locating a new solar panel manufacturing facility in Florida and
that generates a minimum of 400 jobs within 6 months after commencement of operations, with
an average salary of at least $50,000. Such business may assign or transfer its annual credit or
any portion thereof to any other business, subject to certain limitations and conditions.30
Credit under s. 220.191(3), F.S.
The second credit under the CITC is limited to qualifying businesses that establish a
headquarters facility qualifying project. The annual credit amount is the lesser of $15 million or
5 percent of the eligible capital costs made in connection with a qualifying project for up to
20 years, beginning with the commencement of the project.31 The credit is granted against the
state corporate income tax liability of the qualifying business. The total tax credit is limited to
100 percent of the qualifying project’s eligible capital costs.
Unused credits may be carried forward for up to 20 years after the commencement of the
project’s operations.32 The credit may be used by certain related entities of the qualifying
business.33
Certification of Qualifying Businesses and Issuance of Tax Credits
The DEO must certify a business as eligible to receive either of the CITC tax credits before the
commencement of operations of a qualifying project. If a business is certified, the DEO will
enter into an agreement with the business that specifies the planned commencement date of
operations and the total amount of credit the business can expect if the project proceeds as
planned. Agreements are drafted so that a qualified business’s annual credit amount begins on
the date of commencement of operations, beginning the 20-year credit period. If