- April 3, 2025
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On a Friday night in late December — three days before Christmas — longtime CPA Steve Brettholtz' smartphone began to buzz like a carnival in his Fort Myers home. Ditto in Sarasota for tax attorney John Wagner.
This wasn't a late-night call from Santa. Instead, the drumbeat of attention came from a bevy of clients, many of them small business owners, executives and entrepreneurs. President Donald Trump had just signed the Tax Cuts and Jobs Act — the first federal comprehensive tax reform in a generation. “We were inundated with calls,” recalls Brettholtz, shareholder and president of Fort Myers-based Myers, Brettholtz & Co. “People were asking, 'What can I do? What will my deductions look like?'”
A month after President Donald Trump signed the bill, those questions, and many more, linger. Questions come everywhere from some of the region's largest companies to one-person firms. The queries kept people like Brettholtz, Wagner and longtime Tampa tax attorney James Goodwin III abundantly busy as 2017 turned to 2018.
Makes sense, then, that two accountants interviewed by the Business Observer joke that the clear winner in tax reform are themselves and other accountants, tax lawyers and those in tax consulting who will see billable hours pile up.
“It was disappointing that it didn't simplify the tax code,” says Wagner, with Sarasota-based Williams Parker, where he chairs the firm's corporate and tax practices. “It made it more complicated. It made so many changes in so many directions that the long-term ramifications of this are hard to tell right now.”
For this story, the Business Observer interviewed more than a dozen people, from both the advice and tax preparation side and the business owner and taxpayer side.
The story breaks tax reform into three categories most likely to have the largest impact on businesses and the business community in Florida: the corporate tax rate; pass-through income deduction provisions; and changes to state and local tax deduction rates and rules. See related stories for how the law will impact specific companies and industries in the region.
Under the previous tax code, there was a multibracket corporate income tax, with a top marginal rate of 35% and a ceiling, or bubble rate, of 39%, according to the Tax Foundation. With the new code, there's a single-rate, 21% corporate income tax, adds the foundation, an independent tax policy nonprofit.
The rate reduction, says Brendon Pack, chief revenue officer of 1800Accountant, a nationwide virtual accounting firm that recently opened an office in St. Petersburg, “brings the U.S. into alignment with the rest of the world.”
Some of the largest corporations nationwide, including Walmart, American Airlines and Bank of America, announced bonuses and increased wages with the reduction in corporate taxes. Closer to home, fast-growing Seacoast Banking Corp., with $5 billion in assets, says the legislation will lead the bank to reinvest in the market. Stuart-based Seacoast bought Tampa-based Gulfshore Bank in 2016. “We expect the Tax Cuts and Jobs Act will fuel long-term growth in Florida, and Seacoast intends to capitalize on this tremendous opportunity,” Seacoast Chairman and CEO Dennis Hudson says in a statement.
Jim Kuhlman, president and CEO of Bradenton-based Premier Community Bank, says the corporate rate cut will reduce his bank's tax bill by $300,000 or $400,000. That will boost profits, and, he says, allow him to invest more in the bank, which in turn could lead to more business loans in the community. “Overwhelmingly, it's a huge positive thing for us,” Kuhlman says in an interview.
Not surprisingly, other businesses want in on those kinds of cuts in the tax rate. Dennis Townsend, tax attorney with Macfarlane Ferguson & McMullen in Tampa, says several clients have inquired about whether it would be prudent to switch from an S corporation to a C corporation to get that break. “There are some very favorable provisions in there for businesses,” says Townsend.
The jockeying and political maneuvers around how reform handled S-corps was some of the more contentious parts of reform negotiations among congressional Republicans. With the final bill, most accountants and tax lawyers on the west coast of Florida agree: The bill is an opportunity for a substantial deduction for some businesses. Sort of.
“Business owners could see less of a tax burden,” says James Goodwin, also an attorney with Macfarlane Ferguson & McMullen, “particularly if they produce qualified business income, which basically is defined as anything other than investment income — a business that is making something or selling something.”
The law specifically allows a deduction equal to 20% of qualified business income from a partnership, S-corp or sole-proprietorship. Those entities, Goodwin adds, also stand to benefit from tax reform because of a reduction in the top individual tax rate and "more beneficial tax bracket widths."
Yet this deduction comes with a host of qualifications and stipulations. For example, the business can't be a specified service business, which could include doctors, attorneys and other professions. To get the deduction, a business in this category must also pay a designated amount of W-2 wages and/or buy tangible property or equipment. In that way, the bill is designed to benefit a company that's hiring people and making stuff — like a manufacturer — over an office-based small business.
There's also this quandary: A business can otherwise qualify for the pass-through deduction, but if its taxable income surpasses $157,500 on an individual basis, or $315,000 on a joint basis, it's out. Unless it gets an exemption.
“It gets a little confusing,” says Brettholtz. “Not everyone will be able to get the full deductions.”
Adds Wagner, S-corps and small businesses “didn't get as good a deal as big corporations got.”
And on the question of whether an S-corp or pass-through business should switch to a C-corp, in order to gain the same new tax benefits? Not so fast, say multiple tax attorneys. Wagner addressed the question in a recent blog post, “Should you reform your business for tax reform?”
Writes Wagner: “If you can predict future payroll and equipment purchases, the price and timing of a business sale and Congress' whims, you can perform a present value calculation to decide whether pass-through or C Corporation tax status is best for your business.”
Another controversial part of federal tax reform, while not written directly toward businesses, could have a significant impact on the Florida economy — in a positive way. This is the new $10,000 limit on state and local tax deductions for individuals, commonly referred to as SALT. The state and local tax deduction has historically, and disproportionately, favored high-income taxpayers, particularly those in high-tax states, according to the Tax Foundation.
“It just got a lot more expensive to live in New Jersey, New York or Connecticut,” Wagner says.
The impact for Florida? A Dec. 21 Bloomberg opinion piece by financial author and onetime Wall Street trader Jared Dillian doesn't hold back. Titled “The South Will Rise Again Under GOP Tax Plan,” its premise is reform makes low-tax states exceedingly more attractive to people living in high-tax states.
The new SALT deduction ceiling is so profound, says Wagner, it will likely offset any damage to Florida's residential real estate market from the act's decreases in allowable mortgage interest deduction.
“We think it will be good for our industry,” says Realtor Association of Sarasota-Manatee President Greg Owens. “It can actually help us with people who want to move here.”
Dillian, who consults on strategy for Mauldin Economics and writes a market newsletter called The Daily Dirtnap, in addition to columns for Bloomberg and Forbes, has a deeper look at the SALT caps.
“Capping the deductibility of state and local taxes has the potential to result in a population migration so large that it would result in profound economic and social changes,” Dillian writes in Bloomberg. “For starters, the South could become home to some of the nation's largest cities. Many businesses will flee high-tax states in favor of low-tax states. This has been happening for years, but SALT will accelerate the trend.”
Pack, with 1800Accountant, which is adding up to 200 people to staff its St. Petersburg office, is one of several tax industry professionals to acknowledge another issue with the bill: Its speed to Trump's desk could create more problems, beyond confusion. He says the haste could open up a Pandora's box of “creative” tax strategies.
“Once the accountants really dig into it, because of the verbiage and how quickly it was it was written, there might be a lot of opportunity” for that kind of creativity, says Pack.
“We have dozens of accountants who have probably collectively already spent thousands of hours digging through (the bill),” adds Pack. “But to say that we completely understand it would be far from the truth, just because it's so significant. It literally impacts essentially every taxpayer in the country. It's a massive bill.”
Bradenton-based retailer Beall's is decidedly on the win side of tax reform — as is the entire retail industry, says CEO Steve Knopik.
“Almost all retailers will benefit, pretty dramatically,” says Knopik, a CPA who has held leadership roles on the boards of the National Retail Federation, the Florida Retail Federation and the Florida Chamber of Commerce. “Certainly there are things that were being discussed that could have been a disaster for (retailers) like the border adjustment tax.” (The proposed BAT tax would have added a levy to imported goods — including garments.)
With Beall's, which had $1.31 billion in sales in 2016, Knopik says he and the executive team aren't sure what the company will do with the savings it generates from tax reform. He was somewhat surprised, he adds, at the flurry of news in late 2017 from giant corporations that handed out bonuses and gave raises, likely without fully understanding the bill.
Beall's, he says, could use the newfound funds a number of ways, including continuing its investments in e-commerce; buying and upgrading customer database software; opening new stores; remodeling old ones; and looking at wages. Like many executives, Knopik says there remains a lot to learn from the bill. “We are sorting through it right now,” he says. “We are going to find the highest and best uses for this as we can.”
Lakeland-based Publix is on similar ground as Beall's. “We are constantly re-evaluating the business environment as well as monitoring the political landscape to understand how various changes could impact Publix,” company spokesman Brian West says. “At this time, we are still monitoring the potential impact of the tax reform bill and how it could impact the company and our associates.”
— Mark Gordon
(This story was updated to reflect the variety of business owners that could be impacted by tax reform, according to Goodwin.)
