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What taxes do corporations pay in Florida?

On Behalf of | Nov 7, 2023 | Tax Law

Running a corporation in Florida comes with specific tax obligations at both the federal and state levels. Understanding these tax requirements is essential for corporations to manage their financial responsibilities effectively.

Review corporate taxation if you are considering this type of entity for your business.

Federal corporate income tax

Corporations operating in all states must pay federal corporate income tax. The IRS governs this corporate taxation and requires these businesses to file annual federal tax returns.

The federal corporate tax rate varies starting at 21% depending on the corporation’s taxable income. Corporations may qualify for preferential tax rates based on income level.

Deductions and credits can reduce federal tax liability. Examples include research and development credits, investment tax credits and deductions for expenses related to the cost of goods sold.

Florida corporate income tax

In addition to federal corporate income tax, corporations in Florida are also subject to state corporate income tax. Florida’s Department of Revenue oversees the collection of state corporate taxes.

As of 2022, Florida does not impose a corporate income tax on regular C corporations with some exceptions. Corporations classified as S corporations or partnerships are generally not subject to state corporate income tax.

Florida does charge corporations sales and use tax. Sales tax applies to retail sales of tangible personal property, while use tax applies to items purchased for use, storage or consumption.

Other types of state corporate tax include intangible personal property tax, documentary stamp tax and various regulatory fees depending on their specific business activities.

Some local jurisdictions may impose additional taxes or fees on businesses. These can vary widely from one locality to another.

The Florida Division of Corporations reported nearly 94,000 corporations in the state in 2022, making it the second most common business entity after limited liability corporations. Consider both federal and state tax obligations when deciding whether a corporate structure makes sense for your business.