Florida R&D Tax Credits

State and Federal Credits Available

10%

of excess QREs over base

5 years

carryforward

50%

max tax offset

$9M

statewide cap (prorated)

The Florida Research and Development Tax Credit, authorized under §220.196, Florida Statutes, incentivizes corporations engaged in qualified target industry businesses to invest in in-state innovation, offsetting corporate income tax liabilities through the Florida Department of Revenue. This program supports key sectors like manufacturing, life sciences, and aerospace, with applications processed annually for prior-year expenses.

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10%

of excess QREs over base

5 yrs

carryforward

50%

max tax offset

$9M

statewide cap (prorated)

Key Highlights

10% credit on Florida-sourced QREs exceeding the base (average prior 4 years; startups get reduced rate)
Limited to certified qualified target industry businesses in manufacturing, life sciences, information technology, aviation and aerospace, homeland security and defense, cloud information technology, marine sciences, materials science, and nanotechnology
Nonrefundable but carries forward up to 5 years; cannot exceed 50% of net tax liability
C-corporations only; must claim corresponding federal credit under IRC §41
Annual application window each March (generally March 20–26) for prior calendar year expenses, with credits prorated if total requests exceed the 9 million dollar cap

Who Qualifies for the Florida R&D Tax Credit

Eligibility requires C-corporations performing qualified research in Florida that aligns with federal IRC §41 standards, tied exclusively to in-state activities within approved target industries. A certification letter from the Florida Department of Commerce is mandatory to confirm target industry status.

Eligible Entities

C Corporation May claim both the regular and basic research credit
S Corporation Limited entity-level use; can pass credits to shareholders
Partnerships / LLCs Credits pass through to owners via Schedule K-1

Qualified Research Expenses (QREs)

How to Calculate the Florida R&D Tax Credit

Florida uses a single incremental method based on federal principles, applied only to Florida-sourced QREs. No alternative simplified credit (ASC) is available. Businesses must first qualify for the federal credit to claim the state version. Florida still allows taxpayers to claim the federal ASC method for federal purposes, but the Florida state credit is always computed using the single 10% incremental formula on Florida QREs.

Regular Method

Determine total Florida QREs for the current tax year (must exceed base and align with federal §41).
Compute base amount = average Florida QREs over the prior 4 tax years (use available years if fewer; base = 0 if none).
Calculate excess QREs = current Florida QREs – base amount.
Credit = 10% × excess QREs.
For businesses that have not existed for all of the prior 4 taxable years, the credit is reduced by 25% for each of those 4 years that the corporation did not exist. So younger companies still benefit from a lower base but receive a proportionally reduced state credit.
Apply against up to 50% of remaining corporate income tax liability after other credits.

Example Calculation

Prior Year -1 QREs =$1,200K;

Year -2 =$1,000K;

Year -3 =$800K;

Year -4 =$600K;

→ Base = ($1,200K + $1,000K + $800K + $600K) / 4 =$900K

→ Base$0 (full current QREs qualify as excess)

Base Calculation for Florida R&D Tax Credit

Identify Florida QREs allowed under federal §41 for the prior 4 tax years (use available years if fewer).

Compute base = average of those prior Florida QREs (if no prior QREs, base = $0).
Ensure QREs are Florida-sourced and consistent with federal determination.
For startups with fewer than 4 prior years, years before incorporation count as zero in the 4 year average, which often yields a low or zero base, but the resulting credit is then reduced by 25% for each missing year.

Example Calculation

Current Florida QREs =$3,000,000

Prior 4-year average QREs (base) =$1,500,000

Excess =$1,500,000

→ Credit = 10% × $1,500,000 =$150,000

Example with reduction: A company has one missing year in the 4 year lookback. After computing a tentative Florida credit of $300,000, the amount is reduced by 25% (one missing year), yielding a final credit of $225,000 (an effective 7.5% rate on the excess QREs).

Gross Receipts for Base Calculation

Base uses only Florida QREs from prior years; no gross receipts factor (unlike federal fixed-base).
If federal audit reduces QREs, state credit must be recalculated and amended.

Estimate Your Credits

Florida-Specific Rules

Florida's R&D credit emphasizes targeted high-impact industries with strict certification and allocation processes to prioritize innovation in strategic sectors.

Targeted Industries Focus

The credit is reserved for qualified target industry businesses in eight key areas: manufacturing, life sciences, information technology, aviation and aerospace, homeland security and defense, cloud information technology, marine sciences, materials science, and nanotechnology. The program is heavily oversubscribed, with businesses requesting 80 to 100 million dollars in credits each year against a 9 million dollar cap, according to Florida Department of Revenue allocation reports.

Certification Requirement

All applicants must obtain a certification letter from the Florida Department of Commerce confirming target industry status before applying. This ensures alignment with state economic goals and unlocks eligibility for C-corps in innovation-driven fields.

Prorated Annual Cap

Because the 9 million dollar cap is consistently oversubscribed, DOR prorates allocations. For example, in recent years applicants have typically received between about 8.5 percent and 11 percent of their requested credit amounts, with total requests ranging from roughly 80 million to more than 100 million dollars per year, per DOR allocation reports.

Other Important Rules

C-Corporations Only: No pass-through treatment; S-corps, partnerships, and LLCs cannot claim or allocate credits.
Application Window:Strict annual online portal (March 20–26) via Florida Department of Revenue; late filings ineligible.
Federal Prerequisite:Must claim and be allowed the federal credit for the same QREs; no standalone state claim.
Audit and Recalculation: 4-year record retention; federal adjustments trigger state amendments with interest.
Credits are allocated on a prorated basis among all approved applicants when total requests exceed the annual cap.

Targeted Industries Focus

Certification Requirement

Prorated Annual Cap

Other Important Rules

C-Corporations Only: No pass-through treatment; S-corps, partnerships, and LLCs cannot claim or allocate credits.
Application Window:Strict annual online portal (March 20–26) via Florida Department of Revenue; late filings ineligible.
Federal Prerequisite:Must claim and be allowed the federal credit for the same QREs; no standalone state claim.
Audit and Recalculation: 4-year record retention; federal adjustments trigger state amendments with interest.
Credits are allocated on a prorated basis among all approved applicants when total requests exceed the annual cap.

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Florida R&D Tax Credits Case Study

Real results from a Florida aerospace company

$231,000

total state R&D tax credits earned

50%

of wages qualified for credits

$588,000

total R&D tax credits earned (federal + state combined)

Frequent Asked Questions

The Florida R&D tax credit provides a 10% incentive on excess qualified research expenses over a base amount for C-corporations in certified target industries, administered under §220.196, F.S., and aligned with federal IRC §41 rules.

Eligible activities must meet the federal four-part test (technological uncertainty, experimentation, process improvement, business component) and occur in Florida within target industries like aviation, life sciences, or IT. Strike Tax verifies qualifying projects for compliance.

For $2 million in excess Florida QREs, a qualified C-corp could save $200,000, stackable with federal credits. Use Strike Tax’s R&D Credit Calculator for personalized estimates based on your target industry.

No, credits are nonrefundable but carry forward up to 5 years and offset up to 50% of remaining corporate income tax liability. Startups receive phased-down rates but benefit from a low or zero base in early years.

Secure a certification letter from the Florida Department of Commerce, then submit an online application via the Department of Revenue portal during the March 20–26 window for prior-year expenses. Because the program is capped and oversubscribed, it is important to have both your Commerce certification letter and your DOR application ready for the March 20–26 window. Strike Tax handles documentation and filing to maximize allocation.

Yes, the state credit requires claiming the federal credit for the same Florida QREs, allowing full stacking to amplify savings. Strike Tax optimizes dual claims for target industry businesses.

High-impact sectors like manufacturing, aerospace, life sciences, and information technology see the highest utilization due to QRE-intensive activities. Over $100M in credits have been allocated since inception, per state reports.

Defined under §288.005, F.S., with the industry list from former s. 288.106(2)(n), F.S. (2022), it includes firms in manufacturing, life sciences, information technology, aviation and aerospace, homeland security and defense, cloud information technology, marine sciences, materials science, and nanotechnology. Certification from the Department of Commerce is required.

Startups use an average of available prior Florida QREs (zero for years before incorporation), but the credit rate reduces by 25% for each of the prior 4 years not in existence (e.g., one missing year: effective 7.5%). This phases in full 10% benefits over time.

Strike Tax ensures target industry certification, navigates the competitive application window, maximizes federal-state stacking, and provides audit-ready documentation tailored to Florida's unique rules.

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