Florida Corporate Income Tax Update: Adoption of the 2025 Internal Revenue Code and Key Modifications

Overview of Florida IRC Conformity and Corporate Income Tax

Florida’s corporate income tax system “piggybacks” on federal taxable income: corporations compute Florida net income by beginning with federal taxable income and then applying specified state adjustments. Each legislative session, the Florida Legislature updates the Internal Revenue Code (IRC) reference date that state law uses to determine the baseline federal definition. In 2025, through enactment of House Bill 7031, Florida updated its IRC conformity date to adopt the Internal Revenue Code as amended and in effect on January 1, 2025 (the “2025 IRC”), effective for tax years beginning January 1, 2025.

On December 1, 2025, the Florida Department of Revenue issued Tax Information Publication (TIP) 25C01-01, describing the adoption of the 2025 IRC for Florida corporate income tax and identifying key statutory modifications that remain in effect for Florida taxable income.

Florida’s adoption of the 2025 IRC means that taxpayers generally compute Florida taxable income by reference to federal taxable income under the 2025 IRC, subject to Florida’s statutory additions and subtractions. Because Florida is a static conformity state, only federal provisions in the IRC as of the conformity date are incorporated; changes to the federal IRC that post-date that conformity date (such as those in the federal One Big Beautiful Bill Act of 2025, Public Law 119-21) are not automatically adopted for Florida purposes unless and until the Legislature acts.

The Statutory Adoption of the 2025 IRC

Under section 220.03(1)(n), Florida Statutes, Florida generally defines the “Internal Revenue Code” as a version of the federal IRC specified by statute. House Bill 7031 amended the definition so that the Florida IRC now means the IRC as amended and in effect on January 1, 2025 for purposes of corporate income tax, and this update applies retroactively to January 1, 2025.

This adoption incorporates most federal tax law provisions in effect on that date into Florida law for corporate income tax purposes. By updating the IRC conformity date, Florida ensures that corporate taxpayers use the latest federal taxable income rules as the starting point for calculating Florida net income, reducing discrepancies between federal and state computations—except where Florida law prescribes specific modifications.

Key Florida-Specific Modifications

Florida corporate income tax law continues to require specific additions and subtractions to federal taxable income, as set out in section 220.13, Florida Statutes. Even with the 2025 IRC adopted, Florida law preserves certain state-level adjustments that affect the computation of Florida taxable income.

1. Bonus Depreciation Addback and Recovery

For property placed in service before January 1, 2027, Florida requires an addback of 100% of any bonus depreciation deduction taken for federal income tax purposes. Taxpayers then recover the addback over seven years, taking a subtraction equal to one-seventh of the addback amount each year. This addback requirement applies because Florida has historically decoupled from federal bonus depreciation, meaning the benefit taken at the federal level is not fully recognized for state purposes initially, but is phased out over time.

2. Qualified Improvement Property (QIP)

Florida also requires an addition for federally deducted depreciation on Qualified Improvement Property (QIP) placed in service after January 1, 2018. The state then allows a corresponding subtraction based on the depreciation that would have been permitted under the IRC as of January 1, 2020 (prior to the CARES Act retroactive QIP fix). This preserves Florida’s long-standing adjustment for QIP, which treats it differently from federal treatment that accelerated QIP depreciation.

3. Business Meal Expense Adjustments

Florida requires an addback for business meal expenses that were deductible for federal purposes in excess of pre-federal law limits. This reflects a continued decoupling from temporary federal expansions of meal deductions, which Florida does not follow.

4. Film, Television, and Live Theatrical Production Expenses

The state also requires certain addbacks for federal deductions claimed under IRC Section 181 (deduction of certain production expenses), with corresponding subtractions for amounts that would have been deductible absent that section. This ensures Florida taxable income appropriately accounts for these industry-specific deductions.

Impact of the Static Conformity Rule

Because Florida uses static conformity, federal tax changes enacted after January 1, 2025—such as those under the One Big Beautiful Bill Act of 2025—do not apply to Florida corporate income tax until the Legislature adopts them by amending the conformity date or otherwise expressly incorporating them into Florida law.

This static approach contrasts with rolling conformity states, which automatically incorporate future changes to the IRC. Florida’s choice reflects a policy to maintain predictability and legislative control over which federal changes become part of state tax law.

Other Florida Statutory Changes Related to Corporate Tax

In addition to IRC conformity, House Bill 7031 amended other aspects of Florida’s corporate income tax code:

• Excludes charitable trusts from the definition of “corporation” for corporate tax filing purposes, effective for tax years beginning January 1, 2026.
  • Adopts the updated IRC and makes other conforming and administrative updates to corporate tax provisions.

These changes are part of a broader effort to keep state tax law current and administrable.

Compliance and Planning Considerations

Corporate taxpayers subject to Florida income tax should consider the following in light of the 2025 IRC adoption:

1. Federal vs. Florida Taxable Income Reconciliation
   Taxpayers will compute Florida taxable income beginning with federal taxable income under the 2025 IRC and then apply Florida statutory adjustments (e.g., bonus depreciation addbacks, QIP adjustments).
2. Bonus Depreciation Tracking
   Taxpayers should ensure their systems track bonus depreciation addbacks and yearly subtractions under Florida law, which differ from federal rules.
3. Static Conformity Implications
   Because Florida conformed only through the IRC as of January 1, 2025, federal changes enacted after that date (including the OBBBA provisions) may not apply for state purposes until further legislative action occurs.
4. Qualified Trust Exemption Effective 2026
   Taxpayers should plan for the filing and reporting implications of the charitable trust filing exemption beginning with tax years in 2026.