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State program

Florida Research and Development Credit

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  • Offset only
  • Pre-approval required

Last reviewed November 2026

At a glance

  • Jurisdiction: Florida (FL)
  • Credit name: Research and Development Tax Credit (s. 220.196, F.S.).
  • Administering agency: Florida Department of Revenue (DOR); the Florida Department of Commerce certifies target industry eligibility.
  • Rate(s) and base: 10% of Florida qualified research expenses above the average of the prior four taxable years. The maximum credit is reduced 25% for each of the four prior years the business (or a predecessor) did not exist.
  • Refundable? No.
  • Transferable? No.
  • Carryforward: 5 years.
  • Annual cap / proration: $9 million per calendar year for all businesses, prorated when requests exceed the cap. For 2025 expenses, approved applicants received about 5.5% of the credit requested. The credit taken in any year may not exceed 50% of the remaining net corporate income tax liability after other credits.
  • Pre-approval / application and deadline: Required. Apply to DOR on or after March 20 and before March 27 for expenses incurred in the preceding calendar year (for 2026 expenses: March 20–26, 2027). Each application must include a current Department of Commerce letter certifying qualified target industry status.
  • Forms: Online application for allocation through DOR's Corporate Income Tax Research and Development Credit system (Form F-1196); allocated credit claimed on Form F-1120.
  • Sunset / recent changes: No sunset. The statute was not amended in 2026. SB 1076 (2026), which would have raised the cap to $50 million, was not enacted. HB 7031 (ch. 2026-137, Laws of Fla.) decoupled Florida from federal § 174A.

What it is

Florida's research credit is a small, capped credit for corporations in qualified target industries that also claim the federal research credit for research conducted in Florida. Because demand far exceeds the $9 million cap, every approved applicant receives only a fraction of its computed credit.

Who can claim it

Corporations subject to Florida corporate income tax (incorporation in Florida is not required) that:

  • are certified by the Florida Department of Commerce as qualified target industry businesses in manufacturing, life sciences, information technology, aviation and aerospace, homeland security and defense, cloud information technology, marine sciences, materials science, or nanotechnology (as defined in former s. 288.106(2)(n), F.S. 2022); and
  • claim the federal research credit under IRC § 41 for research conducted in Florida.

How it is calculated

  1. Determine Florida qualified research expenses for the calendar year.
  2. Subtract the average Florida QREs for the four preceding taxable years.
  3. Multiply the excess by 10%. Reduce the maximum credit by 25% for each of the four prior years the business did not exist.
  4. DOR prorates all approved applications if total requests exceed $9 million.
  5. The allocated credit used in any year is limited to 50% of remaining net corporate income tax liability; the rest carries forward up to 5 years.

How to claim it

  1. Obtain a current Department of Commerce certification letter confirming target industry status and receipt of the federal credit.
  2. File the online application (Form F-1196) with DOR between March 20 and March 26 for the prior calendar year's expenses. Allocation is prorated, not first-come, first-served, so filing early in the window gives no advantage, but late filings are not accepted.
  3. Claim the allocated credit on Form F-1120.

Recent changes

  • No amendment to s. 220.196 in 2024–2026; the $9 million cap has applied since the 2018 cap of $16.5 million expired.
  • SB 1076 (2026): Would have raised the cap to $50 million starting with 2026 expenses. It did not pass.
  • HB 7031 (ch. 2026-137, Laws of Fla.), approved June 11, 2026, retroactive to January 1, 2026: Updates Florida's IRC conformity date to January 1, 2026, but includes IRC § 174(a) only as in effect on January 1, 2025 and excludes § 174A. For Florida corporate income tax, domestic research and experimental expenditures therefore remain capitalized and amortized over 5 years (15 years for foreign research), and the federal § 174A deduction, the catch-up deduction of unamortized 2022–2024 costs, and the small business retroactive election are not available. Florida's prior conformity date was January 1, 2025, so § 174A was not adopted for 2025 tax years either. Under DOR Tax Information Publication 26C01-01 (July 7, 2026), affected taxpayers recompute federal taxable income for line 1 of Form F-1120, attach a pro forma federal return reflecting the Florida treatment along with pages 1–6 of the federal return, and file Form F-1120X with an explanation if a return was already filed on a different basis. This affects Florida taxable income, not the research credit computation.
  • 2026 allocation (2025 expenses): 168 applications requesting $162.8 million; 146 approved at about 5.5% of requested credit; 22 denied (including for missing certification letters).

Likely examiner questions

These questions illustrate what an examiner may ask about this credit. They are drafts for illustration and should be reviewed by a specialist before use. Most state claims also face standard questions: where the research was physically performed, how wages, supplies and contract research were apportioned between Florida and other locations, how Florida amounts reconcile to federal Form 6765, the Florida credit and carryforward schedule for each year claimed, and whether the claiming entity is the one subject to Florida tax.

  1. Provide the Department of Commerce certification letter for the application year.
  2. Show that the federal research credit was claimed and that the Florida QREs relate to research performed in Florida.
  3. Provide Florida QREs for the current year and each of the four prior years.
  4. Show the start date of the business (or predecessor) for the 25% reduction rule.
  5. Show the application was filed within the March 20–26 window.
  6. Provide the 50% net-liability computation and the carryforward schedule.

Common weak spots

  • Missing or out-of-date Department of Commerce letter, the leading reason for denial.
  • Expecting the full computed credit; proration has recently been 5.5% to 11.6%.
  • Filing outside the one-week window.
  • Including non-Florida research or expenses from a non-target-industry business.
  • Ignoring the 50% liability limit and the 5-year carryforward expiry.

Next steps

Important

This page is general information, not tax advice. Rules change; confirm current requirements with the state revenue agency or a qualified tax professional. creditARMOR is a free service. Passing this mock audit does not guarantee that your claim will pass an IRS or state examination. If needed, Swanson Reed can assist you with representation before the IRS. creditARMOR and TaxTrex are products of Swanson Reed.

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