With a new presidential administration and a Republican-controlled Congress set to take office in January 2025, the U.S. may see sweeping changes to federal tax policy. For Florida businesses, staying ahead of these changes is vital to managing their financial planning and strategic growth. The anticipated tax revisions could include changes to corporate tax rates, expensing rules, green energy incentives, and estate taxes. This article will examine key areas of potential reform and their implications for businesses operating in Florida.

 

Corporate Tax Rates: Will They Go Even Lower?

The Tax Cuts and Jobs Act (TCJA) of 2017 established a flat corporate tax rate of 21%, a significant reduction from the previous graduated rates of up to 35%. Analysts predict that the incoming administration will aim to maintain this rate or potentially reduce it further. Some proposals suggest lowering the rate to 15% for many C corporations, a move intended to spur investment and economic growth.

For Florida-based companies, especially in industries like real estate, construction, manufacturing, and transportation & logistics, a lower corporate tax rate could free up capital for expansion and hiring. However, businesses should stay alert for possible changes to deductions or credits that might offset these savings.

• Action Item: Consult with your CPA to assess the impact of potential corporate tax reductions on your 2025 budgeting and financial strategies.

 

Restoration of Expensing for R&D and 100% Bonus Depreciation

One of the most likely tax changes involves the restoration of research and development (R&D) expensing and 100% bonus depreciation. Under the current rules, businesses must amortize certain R&D costs over five years (or 15 years for foreign expenses), a significant departure from pre-2022 practices that allowed for full expensing.

Similarly, 100% bonus depreciation, introduced under the TCJA, is phasing out and is currently at 60% for 2024, set to decline further. Many expect the new administration to reinstate full bonus depreciation retroactively, allowing businesses to write off the total cost of eligible assets in the first year of use.

Florida’s thriving aerospace, defense, and tech sectors, which rely heavily on R&D, would stand to benefit significantly from these changes. Additionally, real estate and construction businesses, which frequently invest in new equipment, could see substantial tax savings.

• Action Item: Keep detailed records of asset purchases and R&D expenditures to maximize deductions if these changes are enacted. Work with your CPA to explore amending prior-year returns if retroactive provisions are included.

 

The Future of Green Energy Incentives

The Inflation Reduction Act (IRA) of 2022 introduced numerous green energy subsidies for solar, wind, and other clean energy initiatives. The incoming administration has signaled its intent to roll back some of these incentives, arguing that they distort markets and drive up costs.

For Florida businesses, this shift could affect sectors like renewable energy development and construction. However, many green energy projects are concentrated in Republican-led states, making a wholesale repeal of these subsidies unlikely. Instead, selective changes, such as reducing tax credits for specific technologies, may occur.

• Action Item: Companies pursuing green energy projects should consult with financial advisors to reassess the ROI of these investments under potential new tax rules.

 

Estate Tax Exemptions: A Permanent Extension?

The TCJA significantly increased the federal estate tax exemption, currently set at $13.61 million per individual for 2024. However, this higher threshold is scheduled to expire in 2025, reverting to pre-2018 levels (around $5.49 million, adjusted for inflation). The new administration is expected to propose making the higher exemption permanent.

For Florida’s family-owned businesses and high-net-worth individuals, this stability could simplify long-term estate planning. The extension would preserve current strategies to transfer wealth and minimize tax liabilities.

• Action Item: Update your estate plan with financial advisors and legal professionals to ensure you take advantage of any legislative changes.

 

Changes to Payroll and Income Tax Policies

The president-elect has proposed making tips and overtime pay exempt from income tax, a move that could reduce payroll tax burdens for employers in Florida’s robust service industries. However, this proposal is controversial, with critics arguing it could create loopholes and administrative challenges.

Additionally, the expiration of individual income tax cuts enacted under the TCJA looms large. While these cuts primarily affect individuals, small business owners operating as pass-through entities may feel the effects.

• Action Item: Monitor legislative developments closely and evaluate how potential payroll tax changes could affect labor costs and employee compensation strategies.

 

The “2025 Tax Cliff”: Broader Implications for Business

Many provisions of the TCJA, including lower individual tax rates, the $10,000 cap on state and local tax (SALT) deductions, and the expanded child tax credit, are set to expire in 2025. The expiration of these provisions—often called the “2025 Tax Cliff”—creates uncertainty for businesses and individual taxpayers alike.

For Florida businesses, the SALT deduction cap has had less impact due to the state’s lack of personal income tax. However, changes to individual tax rates could influence consumer spending, particularly in industries like retail and tourism.

• Action Item: Develop contingency plans for changes in consumer behavior stemming from individual tax rate adjustments.

 

Tariffs and International Trade Policies

The Trump administration has emphasized protecting American industries through increased tariffs. For Florida businesses engaged in international trade—particularly those exporting citrus, seafood, and manufactured goods—higher tariffs could create new challenges. Conversely, companies competing against foreign imports might benefit.

• Action Item: Review supply chain strategies to minimize exposure to tariff increases and consider diversifying international partnerships.

 

Social Security and Medicare Reforms

As discussions about long-term reforms to Social Security and Medicare gain traction, payroll tax increases could be on the table. These changes would affect businesses with employees earning above certain thresholds.

• Action Item: Factor potential payroll tax hikes into long-term financial planning, especially if your business employs a high number of salaried workers.

 

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Why These Changes Matter for Florida Businesses

Florida’s unique economic environment—marked by its lack of state income tax, reliance on tourism, and growing tech and real estate sectors—means the state’s businesses have much at stake in federal tax policy changes. The combination of lower corporate tax rates, restored expensing provisions, and stable estate tax thresholds could drive growth. However, potential rollbacks of green energy subsidies and changes to tariffs and payroll taxes may present challenges.

Final Thoughts

Navigating tax changes requires careful planning and proactive advice. Florida businesses should work closely with their CPA and financial advisors to assess the potential impact of new legislation. At Pivot CPAs, we are committed to keeping our clients informed and prepared for whatever changes the new administration brings. For more information on how Pivot CPAs can help your business navigate tax reform, contact us today.