On June 11, Florida Governor Ron DeSantis signed HB 7031, the state’s annual Internal Revenue Code (IRC) conformity bill, after it passed both legislative chambers in March. The bill took effect immediately upon signing.
Florida generally updates its corporate income tax code each year to match the federal IRC as of January 1. This year’s bill adopts the IRC as it stood on January 1, 2026, with several specific exceptions tied to the federal One Big Beautiful Bill Act (OBBBA), enacted in July 2025. For those exceptions, Florida continues to treat them as it did on January 1, 2025, and in two cases it decouples from the new federal provisions entirely.
The result: several federal deductions available to Florida businesses this year will not reduce their state corporate income tax the same way. Florida imposes a 5.5% tax on the income of corporations and financial institutions doing business in the state, using federal taxable income as the starting point for that calculation.
Provisions Where Florida Retains Prior-Year Treatment
For the following provisions, Florida continues to apply the rules as they existed under the IRC on January 1, 2025, rather than adopting the OBBBA changes that followed.
Bonus depreciation, Sec. 168(k). OBBBA made 100% first-year bonus depreciation permanent for qualifying assets placed in service on or after January 20, 2025, replacing the phase-down schedule that would have dropped the allowance to 20% in 2026 and eliminated it in 2027. Florida does not follow this change. The state has required businesses to add back federal bonus depreciation and spread the deduction evenly over seven years since it first decoupled from the provision in 2018, and that treatment continues.
Amortization of research and experimental (R&E) costs, Sec. 174(a). Federal law required businesses to capitalize and amortize domestic R&E costs over five years (fifteen years for foreign research expenses) starting in 2022. OBBBA reversed that rule, allowing immediate deduction of domestic R&E costs again for tax years beginning after December 31, 2024. Florida retains the 2022 capitalization and amortization requirement, so businesses must still add back and spread these costs for state tax purposes even though they may deduct them immediately on their federal return.
Business interest expense deduction, Sec. 163(j). This is one of the more consequential decoupling provisions for capital-intensive businesses. From 2022 through 2024, the deduction limit was calculated using an EBIT-based measure of adjusted taxable income, a more restrictive standard than the EBITDA-based calculation used from 2018 through 2021. OBBBA reinstated the more generous EBITDA calculation for tax years beginning in 2025, increasing the federal interest deduction for many businesses with significant depreciation and amortization expense. Florida does not adopt this change and continues to apply the EBIT-based, 30%-of-ATI limitation. Businesses claiming a larger interest deduction federally under the OBBBA rules should expect a Florida addback for the difference.
Business meal deductions, Sec. 274. Florida retains its January 1, 2025 treatment of business meal deductions rather than adopting subsequent federal changes.
Section 179 expensing. Florida continues to follow the IRC as of January 1, 2025, for this provision. This is a meaningful distinction from the QPP and R&E deduction described below, because Florida’s Section 179 treatment already reflects the pre-OBBBA 2025 limits: a $1.25 million expensing cap with a $3.13 million phaseout threshold. OBBBA increased those figures for federal purposes to $2.5 million and $4 million for assets purchased after January 19, 2025, indexed to $2.56 million and $4.09 million for 2026. Florida businesses claiming the higher federal caps should expect the difference to be added back for state purposes.
Provisions From Which Florida Fully Decouples
Florida does not adopt these new OBBBA provisions, regardless of the conformity date used elsewhere in the bill.
Qualified production property, Sec. 168(n). OBBBA created a new 100% first-year deduction for certain nonresidential real property used in manufacturing, production, or refining activities, provided the property is constructed between January 20, 2025, and December 31, 2028, and placed in service before January 1, 2031. Florida has not adopted this provision and qualifying property continues to depreciate over the standard 39-year period for Florida tax purposes.
New domestic R&E deduction, Sec. 174A. This is the newly created code section that permits immediate deduction of domestic R&E costs at the federal level. Florida decouples from it entirely, consistent with of the prior Sec. 174(a) described above.
What This Means for Florida Businesses
Businesses filing Florida corporate income tax returns should not assume that a federal deduction under OBBBA carries through to the state return unchanged. Bonus depreciation, R&E costs, business interest expense, and Section 179 amounts will each require separate calculation and, in most cases, an addback modification on the Florida return to reconcile the federal and state treatment. Qualified production property and the new domestic R&E deduction receive no state-level benefit at all under current law.
Frequently Asked Questions
No. Florida does not impose a personal income tax. HB 7031 addresses only the corporate income tax, which applies to corporations and financial institutions with nexus in the state at a 5.5% rate.
Florida’s conformity statute allows the Legislature to accept the federal IRC as updated each year, or to specify different treatment for particular provisions. Lawmakers often decouple from provisions with a significant state revenue impact, which is the case with several OBBBA changes addressed in this bill.
No. Florida’s IRC conformity bill is enacted annually, and the Legislature could choose to adopt some or all of these federal provisions in a future year.
The Florida House of Representatives’ final bill analysis for HB 7031 is available through the Florida Legislature’s website.
If you have questions about how this legislation affects your Florida corporate tax filings or other state and local tax matters, contact HBK’s SALT Advisory Group at hbksalt@hbkcpa.com.
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