Florida Research and Development Tax Credit Summary

Florida offers a research and development (R&D) tax credit for qualified activities within the state.  Additionally, the credit is only available to certain target industries.

  • Credit is limited to C Corporations only.
  • “Qualified research expenses” (QREs) have the same meaning as in IRC § 41, except that such expenses must be for research conducted within Florida.
  • The credit is equal to 10 percent (10%) of the excess of the QREs over the base amount.
  • A company must claim a federal credit in order to claim a Florida credit.
  • The base amount is calculated as the average of the previous four tax years’ QREs.
  • The credit is limited to 50% of a company’s tax liability.
  • For 2016 only, the credit amount is capped at $23 million for the entire state, reverting back to $9 million for future years.  If the state credit cap is reached, the credits are allocated on a prorated basis.
  • In order to qualify for the credit an application must be made on or after March 20th but before March 27th of the same year for QRES incurred in the prior calendar year.
  • Excess credits may be carried forward up to 5 years.
  • A company must be certified by the Department of Economic Opportunity as a qualified target business industry, including:
    • Clean Technology
    • Life Sciences
    • Information Technology
    • Aviation/Aerospace
    • Homeland Security/Defense
    • Financial/Professional Services
    • Emerging Technologies
    • Other Manufacturing

Florida R&D Tax Credit Case Study

An Orlando company designs and develops component parts for the aviation industry, a qualified target business industry for Florida’s R&D tax credit.  The company claims R&D credits each year for the development activities of its engineers.  The company submits its application and is awarded a R&D credit for the 2014 tax year. The Company qualified for the federal R&D Tax Credit of $58,221 and an additional $11,713 of state R&D Tax Credit in Florida . Summary of credits:

FEDERAL FLORIDA
Year   Total QREs Credit Total QREs Credit
2014 $1,1012,550 $58,221 $1,012,550 $11,713

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