In Florida, a tax credit of 10% will be granted for the qualified research expenses incurred by a business enterprise exceeding the base amount. The Florida R&D tax credit available to a company is restricted to 50% of its tax liability, following the utilization of all other applicable tax credits. Nevertheless, If a business enterprise or its prior entity has not been operational for at least four consecutive taxable years prior to the current taxable year, the maximum allowable tax credit will be reduced by 25% for each taxable year during which the enterprise did not operate. This reduction in the maximum tax credit seeks to balance the tax incentives provided to newly established businesses with those established businesses that have been operating in the state for an extended period. Also, it is possible to carry forward excess credits for up to five years.

In order to obtain the Florida credit, it is imperative for the taxpayer to secure the federal R&D credit first. A certification letter from the Department of Economic Opportunity that verifies the corporation’s eligibility as a QTIB must be submitted alongside the application to apply for the tax credit. The amount of credit that can be claimed is limited to a maximum of $9 million. Once the state credit cap is attained, the allocation of credits will be proportionated and distributed to the corporations that have successfully submitted a valid application.

The state offers a tax credit that can be applied to eligible taxes on qualified research expenses incurred within its borders. To qualify for the Florida tax credit, the business must belong to a Target Industry, as defined by the state of Florida. Target Industries are those businesses operating in specific sectors, such as marine sciences, production, biotechnology, aeronautics industry, and nanotechnology, provided they satisfy the necessary requirements. This credit is exclusively available to corporations that are entitled to the federal credit for qualified research expenses. However, the credit amount that can be claimed by a taxpayer is subject to a cap of 50 percent of their income tax liability, once all other eligible credits have been applied. This means that the credit cannot exceed half of the total tax liability incurred by the taxpayer.

The Research and Development Tax Credit in Florida is limited to “business enterprises.” This classification includes C and S corporations but excludes partnerships and LLCs taxed as partnerships. The purpose of this exclusion is to ensure that only those business entities that have a significant impact on the state’s economy are incentivized to invest in research and development activities. By providing tax credits only to corporations that have a more substantial financial impact on the state, the government can promote innovation and economic growth without stretching its resources too thin. This targeted approach to incentivizing research and development activity helps to ensure that the state is using its resources in the most efficient and effective way possible.