Florida — Corporate Income / Franchise Tax

Florida imposes a corporate income tax on "every taxpayer" — broadly defined to include corporations, organizations, associations, and other artificial entities that derive permanent and inherent attributes not available to natural persons, such as perpetual life, transferable ownership by shares, and limited liability. The tax applies to entities conducting business, earning income, or existing within Florida for the privilege of doing so.

The statutory definition of "corporation" includes domestic and foreign corporations qualified or actually doing business in Florida; joint-stock companies; limited liability companies (LLCs) under Chapter 605; common-law declarations of trust; nonprofit corporations under Chapter 617; agricultural cooperatives; professional service corporations; and other organizations, associations, legal entities, and artificial persons created by or pursuant to Florida, U.S., or any other state law. Importantly, LLCs classified as partnerships for federal income tax purposes are not subject to the tax; however, an LLC taxed as a corporation federally is subject.

The term "corporation" expressly excludes proprietorships (even if using a fictitious name), partnerships of any type as such, and limited liability companies classified as partnerships for federal tax purposes. Natural persons engaging in business individually, in partnership, or as members of an LLC classified as a partnership are not subject to the corporate income tax. S corporations are generally not subject to the tax except in years when they are liable for federal tax under the Internal Revenue Code (e.g., built-in gains tax or excess passive income tax).

Source: Fla. Stat. § 220.02; Fla. Stat. § 220.03(1)(e); Fla. Stat. § 220.11(1)

Florida imposes corporate income tax at a flat rate of 5.5 percent of net income for taxable years beginning on or after January 1, 2022. This rate applies to the corporation's Florida net income — adjusted federal income (either apportioned to Florida or in full for corporations doing business only in Florida), plus nonbusiness income allocated to Florida, less the exemption allowed under § 220.14.

For taxpayers subject to the federal alternative minimum tax under IRC § 55, the tax is imposed at 3.3 percent of alternative minimum net income for the taxable year. When a taxpayer is subject to both the regular tax and the alternative minimum tax, the amount of tax due is the greater of the two computations.

The 5.5 percent rate was established by the Florida Legislature and became effective for taxable years beginning on or after January 1, 2022, replacing a prior system of automatic rate adjustments that applied through 2021.

Source: Fla. Stat. § 220.1105(5); Fla. Stat. § 220.11(3)

Florida imposes corporate income tax on corporations "for the privilege of conducting business, deriving income, or existing within this state." A corporation satisfies the nexus requirement if it meets any one of these three tests. The statute does not establish an economic nexus threshold or minimum revenue requirement for out-of-state corporations.

Corporations incorporated in Florida ("existing within this state") are subject to the tax based solely on their in-state incorporation status. Foreign (out-of-state) corporations become subject to tax by conducting business activities in Florida or deriving income from Florida sources.

The three-prong standard — conducting business, deriving income, or existing in Florida — operates disjunctively; satisfying any single prong establishes nexus.

Source: Fla. Stat. § 220.02(1)

Florida corporate income tax begins with federal taxable income as defined in IRC § 63 and properly reportable for federal income tax purposes. This amount is then modified to arrive at "adjusted federal income" under Fla. Stat. § 220.13(1). Specific Florida additions to federal taxable income include state income taxes deducted on the federal return, tax-exempt interest (net of related expenses), and specified tax credit addbacks. Florida subtractions include dividend income meeting certain requirements, net operating loss carryforwards allowed under Florida law, and nonbusiness income (which is separately allocated). The adjusted federal income figure is then apportioned (for multistate taxpayers) or used in full (for Florida-only taxpayers) to determine Florida net income.

Source: Fla. Stat. § 220.13(1), (2)

Florida apportions adjusted federal income for corporations doing business both within and outside the state using a three-factor formula with a double-weighted sales factor: sales represent 50 percent of the fraction, property represents 25 percent, and payroll represents 25 percent. Each factor is calculated as a fraction with Florida amounts in the numerator and amounts everywhere in the denominator. Special apportionment methods apply to transportation companies, insurance companies, and taxpayers eligible for alternative apportionment under §§ 220.151, 220.152, and 220.153.

Source: Fla. Stat. § 220.15(1)

Florida corporate income tax returns must be filed on or before the later of two dates: (1) the first day of the fifth month after the close of the taxable year, or (2) the 15th day after the due date (without extension) for filing the related federal return. For calendar-year corporations, this typically results in a May 1 Florida due date — May 1 is both the first day of the fifth month following the close of a December 31 year-end and falls after April 15, the federal deadline.

Special rule for June 30 year-ends (temporary). For taxable years beginning before January 1, 2026, corporations with a taxable year ending June 30 file on or before the first day of the fourth month after the close of the taxable year (October 1) or the 15th day after the federal due date, whichever is later. This special four-month rule sunsets for taxable years beginning on or after January 1, 2026, at which point June 30 year-end filers will follow the standard fifth-month rule.

Extensions. When a taxpayer has been granted a federal extension and meets the requirements of Fla. Stat. § 220.32, filing a request for extension with the Florida Department of Revenue automatically extends the Florida due date until the expiration of six months from the original due date. The extension period is seven months (rather than six) for taxpayers with a June 30 year-end for taxable years beginning before January 1, 2026. To obtain the extension, the taxpayer must file Form F-7004 by the original due date and pay the tentative tax due — the balance of tax expected after subtracting estimated payments and prior-year credits. An extension of time to file does not extend the time to pay the tax; the full tax remains due on the original filing deadline.

Extension invalidation and tentative-tax penalty. Under Fla. Stat. § 220.32(3), the taxpayer is liable for a penalty at the rate of 12 percent per year upon the amount of any underpayment of the tax during the extension period. If the underpayment is sufficiently large — exceeding the greater of $2,000 or 30 percent of the tax shown on the return when filed — Florida Department of Revenue practice treats the extension as void, subjecting the taxpayer to late-filing penalties.

Annual filing requirement. Every corporation subject to Florida corporate income tax must file Form F-1120 each year, even if no tax is due. If the due date falls on a Saturday, Sunday, or legal holiday, the return is considered timely if filed on the next business day.

Estimated tax payments. Corporations with tax liability exceeding $2,500 for the taxable year must declare and pay estimated tax. Underpayment of estimated tax results in interest and penalties under Fla. Stat. § 220.34. No penalty or interest is imposed if total payments made on or before each installment date equal or exceed the amount that would be required if the estimated tax were the lesser of (a) the tax computed on the basis of the facts shown on the prior year's return, or (b) 90 percent of the tax finally due for the taxable year. Estimated-tax underpayment interest and penalties run from the date each installment was required to be paid until the earlier of (i) the first day of the fifth month after the close of the taxable year (or, for June 30 year-ends for taxable years beginning before January 1, 2026, the first day of the fourth month), or (ii) the date the underpayment is paid.

Source: Fla. Stat. § 220.222; Fla. Stat. § 220.32; Fla. Stat. § 220.34

For corporations with a fiscal year ending June 30, 2025 (taxable year beginning July 1, 2024, which is before January 1, 2026), the Florida corporate income tax return is due on October 1, 2025—not an earlier date. The calculation requires determining which is later: the Florida-specific four-month rule or the 15th day after the federal due date.

Federal filing deadline

Under IRC § 6072(a), as amended by Pub. L. 114-41 § 2006(a)(1), C corporations generally file by the 15th day of the fourth month after the close of the taxable year. However, the amendment included a delayed effective date for June 30 year-ends: the new fourth-month rule applies to C corporations with fiscal years ending June 30 only for taxable years beginning after December 31, 2025. A corporation with a fiscal year ending June 30, 2025 (beginning July 1, 2024) falls under the old federal rule, which required filing by the 15th day of the third month after the close of the taxable year. For a June 30, 2025 year-end, the federal deadline without extension is September 15, 2025.

Florida special rule for June 30 year-ends

Florida Statute § 220.222(1)(b) provides that for taxable years beginning before January 1, 2026, returns of taxpayers with a taxable year ending on June 30 must be filed on or before the later of (1) the first day of the fourth month after the close of the taxable year, or (2) the 15th day after the due date, without extension, for the filing of the related federal return.

For a June 30, 2025 fiscal year-end:

• First day of the fourth month after June 30, 2025 = October 1, 2025
• 15th day after the federal due date (September 15, 2025) = September 30, 2025

Because October 1, 2025 is later than September 30, 2025, the Florida filing deadline is October 1, 2025.

Sunset of the special rule

The special four-month rule for June 30 year-ends in § 220.222(1)(b) sunsets for taxable years beginning on or after January 1, 2026. A corporation with a fiscal year ending June 30, 2026 (beginning July 1, 2025) will be subject to the standard fifth-month rule in § 220.222(1)(a) rather than the special fourth-month rule. At the federal level, the delayed effective date also expires, and such corporations will file their federal returns by the 15th day of the fourth month (October 15, 2026). Under Florida's standard rule, the return will be due on the later of November 1, 2026 (first day of the fifth month) or October 30, 2026 (15th day after the federal due date), which is November 1, 2026.

Extension period

Under § 220.222(2)(e), for taxable years beginning before January 1, 2026, the extension period for taxpayers with a June 30 year-end is seven months from the original due date (rather than the standard six months). For a June 30, 2025 year-end with an original Florida due date of October 1, 2025, a properly filed extension on Form F-7004 extends the Florida filing deadline to May 1, 2026 (seven months after October 1).

Source: Fla. Stat. § 220.222

Source: IRS Instructions for Form 1120 (2025)

Following an audit or other examination, the Florida Department of Revenue issues a Notice of Proposed Assessment (NOPA) to a corporate taxpayer when the Department determines additional tax, penalty, or interest is due under Chapter 220. The NOPA sets forth the proposed liability amount, the periods at issue, and the basis for the proposed assessment. The statutory framework for contesting a NOPA is established in Florida Statutes § 72.011, which applies to corporate income tax assessments under Chapter 220.

Protest deadline

A taxpayer may contest a proposed assessment by filing a written protest or by filing a petition under the Florida Administrative Procedure Act (Chapter 120). Under § 72.011(2)(a), an action to contest an assessment may not be brought more than 60 days after the date the assessment becomes final. The date on which an assessment becomes final and the procedures by which a taxpayer must be notified are established by rule adopted by the Department of Revenue under § 72.011(2)(b). Department practice establishes that a NOPA becomes a final assessment 60 days after its date of issuance unless the taxpayer files a timely protest or petition. If the NOPA is addressed to a person outside the United States, the protest period is extended to 150 days.

Informal protest procedure

Florida allows an informal protest procedure prior to formal administrative or judicial proceedings. A taxpayer may file a written informal protest with the Department's Technical Assistance and Dispute Resolution unit within 60 days of the NOPA date (150 days for foreign taxpayers). The Department reviews the protest and issues a Notice of Decision (NOD). The NOD becomes a final assessment as of its date of issuance for purposes of § 72.011, unless the taxpayer timely files a petition for reconsideration or pursues a formal remedy.

Formal protest options

After receiving a NOD (or without filing an informal protest), a taxpayer has two alternative paths to formally contest the assessment:

1. Administrative hearing under Chapter 120, Fla. Stat. — The taxpayer may file a petition for a formal hearing with the Division of Administrative Hearings (DOAH). The deadline is 120 days from the NOPA date if no informal protest was filed, or 60 days from the NOD date if an informal protest was filed. There is no extension of the formal hearing petition deadline.

1. Circuit court action under § 72.011 — Alternatively, the taxpayer may file an action in circuit court. The deadline is also 120 days from the NOPA date (if no informal protest) or 60 days from the NOD date (if informal protest filed). Once an action has been initiated under Chapter 120, no action relating to the same subject matter may be filed in circuit court.

Under § 72.011(3), a taxpayer filing an action in circuit court must pay to the Department the amount of tax, penalty, and accrued interest assessed (or the uncontested portion) before or at the time of filing the action. Failure to pay the uncontested amount results in dismissal and an additional 25% penalty.

Source: Fla. Stat. § 72.011

Florida corporate income tax disputes follow a bifurcated appeals structure: taxpayers may choose either an administrative hearing under the Florida Administrative Procedure Act or direct judicial review in circuit court. Unlike many states, Florida does not have a specialized tax appeals tribunal; instead, administrative tax appeals are heard by the Division of Administrative Hearings (DOAH), an independent state agency that conducts formal hearings under Chapter 120 of the Florida Statutes.

Step 1: Division of Administrative Hearings (DOAH)

Under Fla. Stat. § 72.011(1)(a), a taxpayer contesting a corporate income tax assessment under Chapter 220 may file a petition for an administrative hearing pursuant to Chapter 120. Once the taxpayer files a timely petition with the Department of Revenue, the Department refers the case to DOAH. DOAH assigns an Administrative Law Judge (ALJ) to conduct a formal evidentiary hearing. The ALJ issues a Recommended Order containing findings of fact, conclusions of law, and a recommended disposition of the case.

The Recommended Order is submitted to the Executive Director of the Department of Revenue (or the Department's designee), who issues a Final Order adopting, modifying, or rejecting the ALJ's findings and recommendations. Under § 120.57(1)(l), the agency may not reject or modify the ALJ's findings of fact unless the agency first determines from a review of the complete record that the findings were not based on competent substantial evidence or that the proceedings did not comply with the essential requirements of law.

Step 2: Judicial review in Florida District Court of Appeal

A taxpayer aggrieved by the Department's Final Order may seek appellate review in the appropriate Florida District Court of Appeal. Under § 120.68, review is by appeal, not by filing a new action. The appeal must be filed within 30 days of rendition of the final order. The district court reviews the agency record under the standards set forth in § 120.68(7)–(13), giving deference to the agency's findings of fact if supported by competent substantial evidence but reviewing questions of law de novo.

Alternative: Circuit court under § 72.011

As an alternative to the DOAH administrative process, a taxpayer may file an action directly in Florida circuit court under Fla. Stat. § 72.011(1)(a). The action must be filed in the Second Judicial Circuit Court in and for Leon County or in the circuit court in the county where the taxpayer resides, maintains its principal commercial domicile in Florida, or regularly maintains its books and records in the ordinary course of business. Under § 72.011(4)(b), venue for a non-Florida taxpayer is in Leon County.

An action in circuit court is a de novo proceeding, but under § 72.011(3) the taxpayer must pay the tax, penalty, and accrued interest (or the uncontested portion) before or at the time of filing the action. Failure to pay results in dismissal and an additional 25% penalty.

Election is binding

Under § 72.011(1)(a), once an action has been initiated under Chapter 120 (the DOAH path), no action relating to the same subject matter may be filed by the taxpayer in circuit court, and judicial review is exclusively limited to appellate review of the Department's final order under § 120.68. Conversely, once a circuit court action has been filed under § 72.011, the taxpayer may not pursue the administrative remedy. The requirements of § 72.011 are jurisdictional under § 72.011(5).

Source: Fla. Stat. § 72.011

Source: Fla. Stat. § 120.57 (Administrative Procedure Act — Hearings)

Source: Fla. Stat. § 120.68 (Administrative Procedure Act — Judicial Review)

Florida imposes separate statutes of limitation on the Department of Revenue's authority to assess corporate income tax and on a taxpayer's right to claim a refund. Both are governed by general revenue statutes that apply to multiple tax types, including corporate income tax under Chapter 220.

Statute of limitations on assessments — § 95.091(3)

Under Fla. Stat. § 95.091(3), the Department of Revenue may assess any tax, penalty, or interest due under Chapter 220 (corporate income tax) within 3 years after the date the tax is due or the return is filed, whichever is later. This 3-year general limitation period applies to taxes paid on or after July 1, 1999.

Exceptions extending the assessment period:

• No return filed or fraudulent return — The Department may assess at any time if the taxpayer has failed to make any required payment of tax, has failed to file any required return, or has filed a fraudulent return with intent to evade tax.

• Availability of refund period — The Department may assess at any time while the right to a refund or credit of the tax remains available to the taxpayer under § 215.26(2).

• Federal adjustments (Chapter 220 specific) — Under Fla. Stat. § 220.23, if a taxpayer's federal taxable income is adjusted by the IRS or by the taxpayer's filing of an amended federal return, the taxpayer must report the change to the Department within 60 days. The Department may then assess additional Florida corporate income tax resulting from the federal change within 3 years after the taxpayer reports the federal change (or within 3 years after the Department receives notice of the federal change from the IRS, whichever is earlier). This creates a separate limitations period for assessments based on federal adjustments, independent of the general 3-year rule.

• Estate tax exception — Chapter 198 (Florida estate tax) has its own separate limitations rules and is excepted from the general § 95.091(3) framework.

Statute of limitations on refund claims — § 215.26(2)

Under Fla. Stat. § 215.26(2), an application for refund of corporate income tax must be filed within 3 years after the date the tax was paid. This 3-year refund period applies to taxes paid on or after July 1, 1999. For taxes paid after September 30, 1994 and before July 1, 1999, a 5-year refund period applied.

Exceptions:

• Federal adjustments — Under § 220.23, if a federal adjustment results in an overpayment of Florida corporate income tax, the taxpayer must file a refund claim within 3 years after the taxpayer reports the federal change to the Department (or within 3 years after the Department receives notice of the federal change from the IRS).

• Estate tax — Chapter 198 has separate refund rules and is excepted from the general § 215.26(2) framework.

The 3-year refund period is a statute of repose; if an application for refund is not filed within 3 years after the date the tax was paid, the right to a refund is barred.

Source: Fla. Stat. § 95.091(3)

Source: Fla. Stat. § 215.26(2)

Source: Fla. Stat. § 220.23

Florida offers two mechanisms for taxpayers to obtain certainty and resolve potential liabilities prospectively or retroactively: a voluntary disclosure program and a formal written-advice system for Technical Assistance Advisements (TAAs).

Voluntary Disclosure Program

Florida operates a voluntary disclosure program administered by the Department of Revenue. The program allows a taxpayer who has not filed required Florida corporate income tax returns (or who has underreported tax) to come forward voluntarily, pay the tax and interest owed, and receive relief from certain penalties. The statutory framework is found in Fla. Stat. § 213.21, which authorizes the Department to compromise or settle tax liabilities under specified circumstances.

Eligibility and scope:

• The taxpayer must not be under audit or investigation by the Department at the time of disclosure.
• The disclosure must be initiated by the taxpayer (or the taxpayer's representative) before the Department contacts the taxpayer regarding the liability.
• The taxpayer must agree to register (if not already registered), file all required returns, and pay all tax and interest due.

Look-back period:

Florida's voluntary disclosure program typically limits the look-back period to 3 years from the date of disclosure. This is consistent with the general 3-year statute of limitations for assessments under § 95.091(3). Taxpayers who qualify for voluntary disclosure are generally relieved of liability for periods beyond the 3-year look-back.

Penalty waiver:

Under § 213.21(3), the Department has statutory authority to compromise penalties "when it is proven that the failure to comply was due to reasonable cause and not to willful negligence, willful neglect, or fraud." Taxpayers who participate in the voluntary disclosure program and demonstrate reasonable cause for noncompliance typically receive a waiver of penalties (but not interest). The waiver is not automatic; the taxpayer must establish reasonable cause.

Anonymous filings:

Florida's voluntary disclosure program does not allow fully anonymous filings. The taxpayer (or authorized representative) must identify the taxpayer and provide sufficient information for the Department to evaluate eligibility and calculate the liability. However, the initial inquiry may be made through a representative without immediately disclosing the taxpayer's identity, and the representative may engage in preliminary discussions with the Department to confirm eligibility before the taxpayer is formally identified.

Technical Assistance Advisements (TAAs)

Under Fla. Stat. § 213.22, a taxpayer may request a Technical Assistance Advisement (TAA) from the Department on the application of Florida tax law to a specific set of facts. A TAA is the Florida equivalent of a private letter ruling.

Request process:

A TAA request must be submitted in writing to the Department's Technical Assistance and Dispute Resolution office. The request must include a complete statement of facts, copies of relevant documents, the taxpayer's analysis of the applicable law, and the specific question(s) presented. Under § 213.22(2), the Department may charge a fee for issuing a TAA; the fee is established by rule.

Binding effect:

Under § 213.22(1), a TAA is binding on the Department with respect to the taxpayer who requested it, provided the taxpayer fully and accurately described the relevant facts and the facts have not subsequently changed. The Department may not assess additional tax, penalty, or interest contrary to the TAA unless the facts were incomplete or inaccurate or the applicable law has changed. A TAA is not binding as precedent for other taxpayers and is not subject to public disclosure under Florida's public records law if it involves confidential taxpayer information under § 213.053.

Timing:

The Department does not have a statutory deadline for issuing a TAA, but it generally aims to respond within 90 days of receipt of a complete request. Complex issues may take longer.

Alternative to audit dispute:

If a taxpayer disagrees with an audit assessment and believes the dispute turns on the legal interpretation of a statute or rule, the taxpayer may request a TAA before the Department issues a Notice of Proposed Assessment (NOPA). If the Department issues a favorable TAA, the audit may be adjusted accordingly. However, once a NOPA has been issued, the taxpayer must follow the protest procedures described in § 72.011 rather than requesting a TAA.

Source: Fla. Stat. § 213.21 (Compromise of taxes; defaults; installment payments)

Source: Fla. Stat. § 213.22 (Technical assistance advisements; request procedure; effect)

Source: Fla. Stat. § 95.091(3)

Florida does not impose a minimum corporate income tax. If a corporation's Florida net income (as computed under Fla. Stat. § 220.12) is zero or negative, the tax liability is zero — there is no flat fee, minimum payment, or floor amount required.

Computation structure

Under Fla. Stat. § 220.11, the corporate income tax is imposed as "an amount equal to 5½ percent of the taxpayer's net income for the taxable year." Florida net income is defined in § 220.12 as the corporation's adjusted federal income (apportioned or in full, as applicable), plus nonbusiness income allocated to Florida, less the $50,000 exemption allowed by § 220.14. The tax is a percentage of net income; it is not a flat or per-entity charge.

Because the tax is computed as a percentage of net income, the mathematical result when net income is zero or negative is zero tax due. Florida law does not impose any minimum tax, alternative flat fee, or floor payment for corporations that report zero or negative Florida net income. The Department of Revenue's official return instructions confirm this treatment: the short-form corporate return (Form F-1120A) instructs taxpayers to enter zero tax due when Florida net income is zero or less.

No alternative minimum floor

Florida does impose a 3.3 percent tax rate under § 220.11(3) for taxpayers subject to the federal alternative minimum tax (AMT) under IRC § 55, but this is not a minimum tax in the sense of a floor payment. The 3.3 percent rate applies to an alternative measure of income (federal alternative minimum taxable income, adjusted under Florida rules), not as a minimum amount due when regular Florida net income is zero. If both the regular Florida net income computation and the Florida AMT computation yield zero or negative amounts, the tax is zero.

Annual filing still required

Even when no tax is due, every corporation subject to Florida corporate income tax must file an annual return (Form F-1120 or F-1120A). The filing requirement is not conditioned on tax liability; it applies to all entities conducting business, earning income, or existing in Florida. Failure to file a return when required subjects the taxpayer to penalties even if no tax is owed.

Source: Fla. Stat. § 220.11

Source: Fla. Stat. § 220.12

Source: Fla. Stat. § 220.14

Florida employs cost-of-performance sourcing for sales of services and intangible property under the corporate income tax sales factor, based on where the income-producing activity is performed rather than where the customer is located. This approach contrasts with market-based sourcing used in many other states.

Statutory framework

Florida statute § 220.15(5) defines the sales factor as a fraction with Florida sales in the numerator and total sales everywhere in the denominator, but the statute does not specify how to source sales of services or intangibles. The statute addresses only tangible personal property (sourced to destination) and financial-organization receipts, leaving services and intangibles to administrative rules.

Regulatory rule: cost-of-performance

Florida Administrative Code rule 12C-1.0155(2)(l), titled "Other Sales in Florida," governs sourcing of sales not explicitly addressed in the statute — which includes most services and intangible-property receipts. The regulation, last amended January 8, 2019, provides:

> Gross receipts from other sales shall be attributed to Florida if the income producing activity which gave rise to the receipts is performed wholly within Florida. Also, gross receipts shall be attributed to Florida if the income producing activity is performed within and without Florida but the greater proportion of the income producing activity is performed in Florida, based on costs of performance.

"Income producing activity" means "the transactions and activity directly engaged in by the taxpayer for the ultimate purpose of obtaining gains or profits" and applies separately to each item of income. When a taxpayer uses independent contractors, amounts paid to those contractors are included in the cost-of-performance calculation.

All-or-nothing apportionment

Florida's cost-of-performance rule operates on an all-or-nothing basis. If the greater proportion of costs to perform the income-producing activity are incurred in Florida, 100 percent of the receipts from that item are sourced to Florida. If the greater proportion of costs are incurred outside Florida, none of the receipts are sourced to Florida. There is no fractional or percentage-based apportionment of individual transactions under the regulation.

Intangible property — identified income-producing activity

For intangible property, the regulation draws a distinction. Where "the income producing activity in respect to business income from intangible personal property can be readily identified," the income is sourced under the cost-of-performance framework described above. Rule 12C-1.0155(2)(l)2 provides examples:

• Interest on deferred payments from sales of tangible property is sourced based on the income-producing activity.
• Income from the sale, licensing, or other use of intangible property (trade names, trademarks, patents) is sourced to the state in which the intangible is used by the customer.

Where business income from intangible property cannot readily be attributed to any particular income-producing activity, such income is excluded from both the numerator and denominator of the sales factor.

Department practice and judicial enforcement

The Florida Department of Revenue has in some Technical Assistance Advisements and audit positions attempted to apply market-based sourcing — sourcing service and intangible receipts to the customer's location or where the benefit is received. However, Florida circuit courts have repeatedly rejected this practice and held that the plain language of rule 12C-1.0155(2)(l) requires cost-of-performance sourcing.

In Billmatrix Corp. v. Department of Revenue, No. 2020-CA-000435 (Fla. 2d Cir. Ct., Leon Cnty., Mar. 1, 2023), the court granted summary judgment to the taxpayer and held that the regulation mandates cost-of-performance sourcing for service revenues. The court rejected the Department's market-based methodology as inconsistent with the regulation's plain language and ruled that the Department's inconsistent application violated the Florida Taxpayers' Bill of Rights. A similar outcome occurred in Target Enterprise, Inc. v. Department of Revenue, No. 2021-CA-002158 (Fla. 2d Cir. Ct., Leon Cnty., Nov. 28, 2022).

As of June 2026, the statute and regulation have not been amended to adopt market-based sourcing. Taxpayers sourcing service and intangible receipts should apply the cost-of-performance methodology set forth in rule 12C-1.0155(2)(l), notwithstanding contrary positions the Department may assert in audit or guidance.

Financial organizations — special rule

Financial organizations as defined in § 220.15(6) are subject to an expanded sales-factor definition under § 220.15(5)(c) and special sourcing rules in rule 12C-1.0155(3). Those rules are not addressed here.

Source: Fla. Stat. § 220.15

Source: Fla. Admin. Code r. 12C-1.0155 (effective Jan. 8, 2019)

Florida follows federal classification for single-member limited liability companies (SMLLCs) that are disregarded entities for federal income tax purposes. A single-member LLC disregarded at the federal level is not subject to Florida corporate income tax under Chapter 220. Instead, its activities and income are treated as belonging to the owner.

Statutory exemption from corporate income tax

Under Fla. Stat. § 605.1103(1), "a single-member limited liability company that is disregarded as an entity separate from its owner for federal income tax purposes . . . is not an 'artificial entity' within the purview of s. 220.02 and is not subject to the tax imposed under chapter 220." Because Florida's corporate income tax applies only to entities meeting the statutory definition of "corporation" or "artificial entity" in § 220.02, disregarded SMLLCs fall outside the tax base entirely.

Treatment of the owner

The statute provides that if a single-member LLC is disregarded for federal income tax purposes, "its activities are, for purposes of taxation under chapter 220, treated in the same manner as a sole proprietorship, branch, or division of the owner." The SMLLC's income, deductions, and activities are attributed directly to the owner for Florida corporate income tax purposes, mirroring the federal look-through treatment.

Owner entity type determines tax consequences

The Florida tax treatment of a disregarded SMLLC's income depends on the owner's classification:

• Individual owner — The SMLLC's activities are treated as a sole proprietorship. Because Florida imposes no personal income tax on individuals, the income is not subject to Florida income tax (though other Florida taxes, such as sales tax or reemployment tax, may apply depending on the business activities).

• Corporate owner — The SMLLC's activities are treated as a branch or division of the corporate owner. The income, expenses, property, payroll, and sales of the SMLLC are included in the corporate owner's Florida corporate income tax return (Form F-1120), aggregated with the parent's own operations for purposes of nexus determination, apportionment, and the calculation of adjusted federal income.

• Partnership owner — The SMLLC's activities are treated as part of the partnership's operations. Because a partnership classified as such for federal purposes is itself not subject to Florida corporate income tax under § 605.1103(1), the SMLLC's income flows through to the individual partners (who are not subject to Florida personal income tax) or to corporate partners (who report their distributive share).

Election to be taxed as a corporation

A single-member LLC may elect to be classified as a corporation for federal income tax purposes by filing IRS Form 8832 (Entity Classification Election). If the SMLLC makes this election, it is no longer a disregarded entity for federal purposes. Under Fla. Stat. § 605.1103(2), Florida follows the federal classification election: the LLC "shall be classified identically to its classification for federal income tax purposes." An SMLLC electing corporate status federally becomes subject to Florida corporate income tax as a "corporation" under § 220.03(1)(e), which expressly includes LLCs classified as corporations for federal purposes in the definition of taxable corporations.

Separate legal entity for non-income-tax purposes

Although a disregarded SMLLC is not a separate taxable entity for Florida corporate income tax, Fla. Stat. § 605.1103(3) clarifies that "single-member limited liability companies and other entities that are disregarded for federal income tax purposes must be treated as separate legal entities for all non-income tax purposes." For example, for Florida reemployment (unemployment) tax purposes, a disregarded SMLLC is the employer and must register and report wages under its own name and federal employer identification number (EIN), even though it is disregarded for income tax. The same principle applies to sales and use tax registration, transactional taxes, and regulatory compliance obligations.

Consistency with federal classification

Florida's conformity to federal entity classification in § 605.1103 reflects a statutory policy decision to avoid divergence between federal and state treatment for pass-through and disregarded entities. Florida statute does not permit a taxpayer to adopt one classification for federal purposes and a different classification for Florida corporate income tax purposes (absent a change in federal classification or a federal election). The federal classification controls.

Source: Fla. Stat. § 605.1103

Source: Fla. Stat. § 220.02

Source: Fla. Stat. § 220.03

Florida’s federal conformity was materially updated by Chapter 2026-___, Laws of Florida (House Bill 7031), enacted June 2026 and effective retroactively to January 1, 2026. Florida now conforms to the Internal Revenue Code as amended and in effect on January 1, 2026, with statutory exceptions:

• IRC Sections 168(k), 174(a), 163(j), 274, and 179 are adopted at their January 1, 2025 versions—Florida did not adopt any 2025 amendments to those provisions.
• IRC Sections 168(n) (qualified production property deduction) and 174A (domestic research and experimental deduction) are explicitly excluded from Florida conformity and do not apply for Florida tax purposes.
• The act also gives the Florida Department of Revenue authority to adopt rules, including emergency rulemaking, to implement the updated conformity as needed.

This represents a material change compared to prior law, which conformed to the IRC as of an earlier date and did not include these specific carve-outs or exclusions. As a result, Florida corporate taxpayers must apply the IRC as amended and in effect on January 1, 2026, except for the listed decoupled provisions and exclusions, for tax years beginning on or after January 1, 2026, unless otherwise specified by statute.

Source: Fla. Stat. § 220.03(1)(n) (2026) Source: Florida Senate Bill Summary (2026 Regular Session, HB 7031)

Florida offers several statutory corporate income tax credits under Chapter 220, including an R&D tax credit, rural and urban job tax credits, and a capital investment tax credit. Each credit is governed by its own statute with specific eligibility tests, limits, and procedural requirements.

1. Research & Development (R&D) Tax Credit (Fla. Stat. § 220.196)

Florida's R&D tax credit is available to a "business enterprise" that is a "target industry business" (as defined by Fla. Stat. § 288.005), which conducts "qualified research" in Florida and claims a federal credit for those activities under IRC § 41. The term "qualified research expenses" aligns with the federal definition in IRC § 41(b), while "base amount" is as defined under IRC § 41(c). The business must have qualified research expenses in Florida exceeding its base amount for the year.

• Credit Amount and Limits: The credit equals 10% of the excess of Florida qualified research expenses over the base amount. For businesses with fewer than 4 prior taxable years, the base amount is reduced by 25% for each missing year. The credit cannot exceed 50% of tax remaining after all other credits per s. 220.02(8). Unused credits may be carried forward for up to 5 years. There is a statutory aggregate cap—since 2018, $9 million per year statewide. If total approved credits exceed the cap, credits are prorated among applicants.
• Application Procedure: Applications must be submitted online to the Florida Department of Revenue between March 20 and March 27 of each year. The business must also obtain a "target industry business" certificate from the Department of Commerce. Changes to the underlying federal credit (by IRS audit or federal return amendment) require corresponding adjustments to the Florida credit and filing of an amended return within 60 days.

Source: Fla. Stat. § 220.196

2. Rural Job Tax Credit and Urban High-Crime Area Job Tax Credit (Fla. Stat. § 220.1895)

Florida provides corporate income tax credits for job creation under the Rural Job Tax Credit Program (Fla. Stat. § 212.098) and Urban High-Crime Area Job Tax Credit Program (Fla. Stat. § 212.097), each managed by the Department of Commerce. To claim either:

• Eligibility: The business must be approved and certified by the Department of Commerce as meeting the statutory criteria, including a minimum number of new jobs created in a designated rural or high-crime urban area (usually at least 10 new jobs; see referenced program statutes for area-specific thresholds and wage requirements).
• Credit Amount: The credit amount and calculation method are specified by the respective job credit statutes—typically a fixed dollar amount per qualifying job.
• Carryforward and Limit: Any unused amount may be carried forward for up to five years. The credit cannot be claimed for both sales tax and income tax for the same jobs.

Source: Fla. Stat. § 220.1895

3. Capital Investment Tax Credit (Fla. Stat. § 220.191)

The capital investment tax credit is intended to incentivize large-scale, long-term capital projects.

• Eligibility: The applicant must be a "qualifying business," certified by the Department of Commerce for a "qualifying project"—typically a facility in a designated high-impact sector creating at least 100 new jobs (details and alternative thresholds for targeted industry or headquarters projects are set out in § 220.191(2)(j)).
• Eligible Capital Costs: Defined by statute to include non-financed costs for land, buildings, equipment, and other property integral to the facility.
• Credit Amount and Limits: The annual credit equals 5% of eligible capital costs, for up to 20 years, capped annually at a percentage of the taxpayer's Florida corporate income tax (between 50–100% depending on investment amount: 100% for $100 million+, 75% for $50–$100 million, 50% for $25–$50 million). Unused credit may be carried forward into years 21–30.
• Certification and Claiming: Initial certification and a written agreement with the Department of Revenue are required, specifying project requirements and measurement methods. Annual review is required to maintain eligibility.
• Special Transferability: Credits earned for qualified solar panel manufacturing projects meeting further statutory requirements may be transferred under specified conditions.

Source: Fla. Stat. § 220.191

Florida credits are strict creatures of statute; eligibility is determined through the application and certification processes laid out in the above statutes, and annual credit caps and line-item documentation must be satisfied. Practitioners should refer to the detailed statutory and regulatory cross-references within each credit statute for implementation details and current-year limits.

Source: Fla. Stat. § 220.196 Source: Fla. Stat. § 220.1895 Source: Fla. Stat. § 220.191

Florida corporate income tax uses "adjusted federal income" as its core tax base, beginning with federal taxable income but requiring a series of statutory modifications under Fla. Stat. § 220.13. Practitioners must account for a recurring and evolving list of statutory additions and subtractions, with the framework updated by HB 7031 (2026 Regular Session) and retroactively effective for tax years beginning on or after January 1, 2026.

Recent statutory update (HB 7031, Laws of Florida 2026) Effective for tax years beginning on or after January 1, 2026, legislative amendments to Fla. Stat. §§ 220.03 and 220.13 advance Florida’s IRC conformity date to January 1, 2026 and explicitly decouple the state from several federal provisions. The law:

• Conforms to the Internal Revenue Code as amended and in effect on January 1, 2026, except for provisions specifically excluded or modified.
• Maintains Florida-specific treatment for IRC §§ 168(k) (bonus depreciation), 174(a) (R&D deductions), 163(j) (business interest expense), 274 (entertainment expenses), and 179 (expensing), by referring to those sections as in effect on January 1, 2025.
• Excludes IRC §§ 168(n) (qualified production property deduction) and 174A (domestic research and experimental expense) entirely from Florida income tax.
• Authorizes the Department of Revenue to issue emergency rules for implementation.

Major additions (§ 220.13(1)(a)):

• State or D.C. income taxes deducted federally must be added back.
• Tax-exempt interest income and expenses are adjusted as detailed in the statute.
• Bonus depreciation and other accelerated write-offs under IRC § 168(k) are fully added back (with a separate, Florida-specific recovery schedule under § 220.13(1)(e)).
• Excess business interest disallowed under IRC § 163(j) is added back, following Florida’s decoupling rule.
• Other technical add‑backs: deferred cancellation-of-indebtedness income, federal income exclusions, and GILTI/subpart F inclusions are addressed in separate subsections.

Major subtractions (§ 220.13(1)(b)-(d)):

• Certain intercompany and foreign-source dividends may be subtracted if statutory requirements are met.
• NOLs, capital loss carryovers, and charitable contribution carryforwards allowed under Florida law.
• Subtractions for previously taxed cancellation-of-indebtedness income once recognized federally, and technical basis or allocation adjustments.

Other practice notes

• No NOL or capital loss carrybacks are allowed for Florida purposes—only carryforwards as allowed by Florida statute.
• Modified federal deductions and exclusions must match the tax year’s conformity and decoupling rules as enforced by the Department.
• All modifications precede apportionment under § 220.15. Practitioners should consult the latest Department rule publications and emergency rules for detailed implementation guidance following legislative updates.

Effective date These rules reflect the law as amended, effective for tax years beginning on or after January 1, 2026.

Source: Fla. Stat. § 220.13 Source: Fla. Stat. § 220.03

Florida determines corporate income tax on a separate-entity basis. Related corporations generally must file separately and cannot, except in specifically enumerated circumstances, file a combined, consolidated, or unitary return for Florida purposes.

No mandatory or elective combined reporting As of June 2026, Florida does not permit or require combined reporting (unitary group reporting) for related corporations under its corporate income tax code. Section 220.131 of the Florida Statutes governs consolidated filings but applies only in narrowly defined circumstances (see below); otherwise, each legal entity having nexus in Florida computes and reports its tax liability as a standalone taxpayer.

Consolidated returns — very limited allowance Fla. Stat. § 220.131 allows a Florida affiliated group (limited to groups with common parentage under IRC § 1504) to elect to file a consolidated Florida return, but only if the group has filed a federal consolidated return for the same period. The election must be made with the filing of the group’s first Florida consolidated return; once made, it is binding for all future years unless the Department of Revenue grants permission to terminate it. The election cannot be made retroactively. Out-of-state corporations that do not have nexus for Florida tax purposes or are not included in the federal consolidated group cannot be included in the Florida consolidated return. There is no elective or mandatory combined, unitary, or water’s-edge reporting regime for groups of related but non-consolidated corporations.

No unitary business or water’s-edge test Florida’s statutes do not reference a "unitary" or "water’s-edge" test; the concepts and related apportionment adjustments used in states with unitary combined reporting do not apply. Florida corporate returns aggregate the activities and attributes only within the statutory definition of an affiliated group that files federally on a consolidated basis, and only upon a timely and irrevocable election. Otherwise, corporations file as separate entities.

Summary table:

• Required combined/unitary reporting: No
• Elective combined/unitary reporting: No
• Consolidated filing (limited): Yes, but only for IRC § 1504 groups that file a federal consolidated return, and only upon timely election under Fla. Stat. § 220.131.

Source: Fla. Stat. § 220.131

Source: Florida Department of Revenue, Corporate Income Tax – Florida Corporate Income Tax Return (Form F-1120) Instructions

Florida determines corporate income tax liability on a separate-entity basis, but under certain anti-abuse circumstances, the Florida Department of Revenue (DOR) may require the filing of a consolidated return. This power is specifically authorized under Fla. Stat. § 220.131(5), even though Florida does not otherwise require or permit general unitary combined reporting.

DOR authority for forced combination

Fla. Stat. § 220.131(5) provides:

> "If it appears to the department that any agreement, understanding, arrangement, or transaction or series of transactions between affiliated corporations or members of an affiliated group has resulted in the avoidance of taxes under this code or in the improper reflection of income attributable to business done in this state, the department may, by order, require such corporations or affiliated group of corporations as it determines to be necessary, to file a consolidated return under this section, or to make such computations, adjustments, or allocations, or to furnish such information, as may be necessary to properly determine and assess the tax liability under this code."

This provision allows the DOR, at its discretion, to require a group of affiliated corporations to file a Florida consolidated return, or to otherwise adjust returns, if the DOR finds that separate returns would result in tax avoidance or improperly reflect the income attributable to Florida. The exercise of this power acts as an anti-abuse mechanism rather than the establishment of a general combined reporting requirement. The statute does not establish a mechanical standard, formula, or enumerated bright-line tests as to when forced combination will apply; invocation is at the Department’s discretion based on specific facts identified in audit or review.

No general combined/unitary reporting

Florida statutes do not provide for elective or mandatory unitary or water’s-edge combined reporting; the forced combination remedy is limited to cases described in § 220.131(5). If not triggered, related corporations file as separate entities or, if eligible and properly electing, as a federally-defined consolidated group under § 220.131(2)-(3).

As of June 2026, no Florida regulation or published appellate case elaborates on the standards or processes for exercising this forced combination authority. Unable to confirm further administrative practice or criteria from primary authority as of this date.

Source: Fla. Stat. § 220.131(5)

Direct answer: Florida sources receipts from the sale, licensing, or provision of software—including digital goods and cloud-based services—under the cost-of-performance (COP) rule in Florida Administrative Code Rule 12C-1.0155(2)(l). Receipts are included in the Florida sales-factor numerator only if the greater proportion of the income-producing activity is performed in Florida. There is no alternative provision for market-based or customer-location sourcing.

Why: Rule 12C-1.0155(2) categorizes receipts into discrete types. Subsections (2)(a)–(k) address tangible personal property, rentals, construction, etc. Rule 12C-1.0155(2)(l) (labeled “Other sales in Florida”) covers intangible property transactions—including licensing of software and digital goods—by prescribing the COP method. The rule states: > “If services relating to... gross receipts are not classified in [earlier subsections], those gross receipts are attributable to Florida if the greater proportion of the income-producing activity is performed in Florida, based on the cost-of-performance.”

This means that for software licensing or cloud-based delivery, sourcing hinges on where the majority of costs to deliver, maintain, or support that software are incurred. The regulation does not permit sourcing based on where the customer is or uses the software, and is silent as to mixed transactions (software plus services/hardware), meaning such issues may require further guidance or analysis of the transaction's primary income-producing activity.

Source support:

• Authority: Fla. Admin. Code r. 12C-1.0155(2)(l), Florida Department of Revenue regulation, prescribing cost-of-performance sourcing for “other sales” including intangibles and software licensing.

Caution / review status: Not yet human confirmed. Practitioners should review whether specific offerings (e.g., embedded hardware-software bundles or hybrid services) fall within “other sales” under (2)(l) or another subsection providing different sourcing. Disputes over categorizations or cost allocation may require further legal or ruling guidance.

Source: Fla. Admin. Code r. 12C-1.0155

Florida does not provide statutory or administrative relief for taxpayers who fail to file timely applications for either the R&D credit under § 220.196 or the Urban High‑Crime Area job tax credit under § 212.097. Deadlines are strictly enforced, and late submissions are not accepted outside the narrowly defined statutory frameworks.

R&D Tax Credit (F.S. § 220.196): The statute stipulates that applications must be filed between March 20 and March 27 for expenses incurred in the preceding calendar year; if total applications exceed the cap, allocations are prorated based on timely submissions. While the Department may adopt rules governing forms, procedures, and evidence of qualification, there is no authority in the statute or rule to grant extensions, waive late filing, or otherwise provide relief for missed deadlines. Source: Fla. Stat. § 220.196

Urban High‑Crime Area Job Tax Credit (F.S. § 212.097): Applications must be filed within the timeframes and formats established by statute. If an application is deemed insufficient, the applicant may reapply—but only within three months of receiving notice of insufficiency. There is no statutory provision allowing for late filing beyond that opportunity. Source: Fla. Stat. § 212.097(11)

In practice: Available primary authorities offer no indication that the Department of Revenue exercises discretion to accept late applications for these credits. The statutory schemes reflect firm deadlines with no “good cause” relief.

Human confirmation status: Not yet human confirmed.

Florida’s administrative practice for IRC conformity and taxpayer amended-return obligations materially changed in 2026 with the enactment of Chapter 2026-137, Laws of Florida (HB 7031). Florida now conforms to the Internal Revenue Code (IRC) as amended and in effect on January 1, 2026—superseding the prior static conformity date—with retroactive application to tax years beginning on or after January 1, 2026, unless otherwise stated.

Updated conformity mechanics (2026):

• Florida’s IRC conformity is annually set by statute. HB 7031 (enacted June 2026, effective retroactively) advances the conformity date to January 1, 2026 for corporate income tax purposes (see Fla. Stat. § 220.03(1)(n) as amended 2026).
• The legislation explicitly excludes IRC §§ 168(n) and 174A from Florida’s tax base, and decouples from IRC §§ 168(k), 174(a), 163(j), 274, and 179 at their January 1, 2025 versions. These federal changes are not incorporated for Florida tax even if effective federally after that date.
• The Department of Revenue was granted emergency rulemaking authority to implement the transition, and has issued updated guidance (see TIP 25C01-01, July 7, 2026).

Taxpayer amended return obligations:

• Florida does not automatically require taxpayers to amend closed or previously filed returns solely as a result of the conformity date update. Unless a specific retroactivity provision or DOR instruction applies, amended returns are generally not required for closed years.
• If the change in conformity date causes a difference for open or as-yet-unfiled returns (taxable years beginning on or after January 1, 2026), taxpayers must compute Florida taxable income using the new conformity rules and decoupling provisions.
• Amended returns are still required under Fla. Stat. § 220.23 if the taxpayer’s federal income is changed due to IRS audit, settlement, or federal amended return for any affected tax year—those are separate from general conformity-date updates.

Department guidance:

• The Florida DOR issues Tax Information Publications (TIPs) annually explaining each IRC conformity update, including which years and returns are affected, and any instructions for retroactive application and amending returns. TIP 25C01-01 (July 2026) details implementation of the 2026 conformity.

Effective date: This administrative and statutory update applies for tax years beginning on or after January 1, 2026 and reflects guidance current as of July 2026.

Source: Fla. Stat. § 220.03(1)(n) (2026) Source: Fla. Stat. § 220.23 Source: Florida Department of Revenue, TIP 25C01‑01 (July 7, 2026)