Florida R&D Tax Credit Summary

FLORIDA R&D TAX CREDIT SUMMARY

Florida State R&D Tax Credit

The credit is based upon qualified research expenses in Florida allowed under IRC § 41. Only qualified target industry businesses in the manufacturing, life sciences, information technology, aviation and aerospace, homeland security and defense, cloud information technology, marine sciences, materials science, and nanotechnology industries may qualify for a research and development tax credit.

  • The tax credit will be 10% of the excess qualified research expenses over the base amount
  • The maximum tax credit for a business enterprise that has not been in existence for at least four taxable years immediately preceding the taxable year is reduced by 25% for each taxable year for which the business enterprise, or a predecessor corporation that was a business enterprise, did not exist
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    • The credit taken in any taxable year may not exceed 50% of the business enterprise’s remaining net income tax liability after all other credits have been applied under Fla. Stat. §220.02(8)
    • The combined total amount of research and development tax credits that may be granted to all business enterprises in any calendar year is $9 million
    • Credits will be allocated by the Department in the order in which completed applications are received

    The “base amount” is the average of the business enterprise’s qualified research expenses in Florida allowed under IRC § 41 for the four taxable years preceding the taxable year for which the credit is determined.

    How to Obtain the Credit?

    The application process for an allocation of credit related to expenses incurred in the 2019 calendar year will open on March 20, 2020.

    Refundable/Transferable Tax Credit- Yes

    Carryforward

    Any unused credit may be carried forward and claimed by the taxpayer for up to five years. A taxpayer may not transfer or sell its credit or its right to apply for a credit to another taxpayer.

    Flow-Through Entity

    Businesses that are partnerships, limited liability companies taxed as partnerships, or disregarded single-member limited liability companies, are not corporations under Section 220.03, F.S., and, therefore, may not apply for an allocation of credit. However, each corporate partner of a partnership may apply separately for an allocation of credit based on the corporation’s separate research expenses, including allocated partnership research expenses. For disregarded entities, the corporation that owns the single-member limited liability company must apply separately for an allocation of credit based on the corporation’s separate research expenses, including those of the disregarded single-member limited liability company. For purposes of 26 U.S.C. s. 41, the research expenses are apportioned among the partners during the taxable year and are treated as paid or incurred directly by the partners rather than by the partnership.

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