The Effect of Repealing the Insurance Premium Tax
For at least the last 60 years, Florida’s tax policy has provided a clear preference to insurance companies that had a presence in Florida. Since 1988, that preference has been in the form of a credit against a company’s insurance premium taxes of 15 percent of the salaries paid to Florida-based employees. This preference helps to promote the insurance industry in Florida, a desirable, clean industry with relatively high-paying jobs.
The 2017 Legislature is considering SB 378, a bill that would eliminate the insurance premium tax (IPT) credit. This would result in a tax increase of more than $314.5 million.It must be remembered that, while it certainly provides an economic development incentive, the credit was not created as a new tax cut or benefit to Florida insurers, it was used to lessen a significant tax increase on them. The credit was part of an insurance tax overhaul that took two tries to find the right level of taxation, while maintaining a 40 year preference for Florida companies.
This report examines the issues involved with repealing the salary credit and concludes it should be maintained.