Overview
- Florida enacted HB 7031, Chapter No. 2026-137, updating its corporate income tax conformity to the Internal Revenue Code (IRC) as amended and in effect on January 1, 2026. The legislation is effective June 11, 2026, and applies retroactively to January 1, 2026.
- Although Florida generally updated its corporate income tax IRC conformity date, it retained the January 1, 2025 versions of several provisions thus excluding any amendments made to the sections by the One Big Beautiful Bill Act (OBBBA) under Public Law 119-21. These include IRC Sections 168(k), 174(a), 163(j), 274, and 179. Florida also excluded new IRC Sections 168(n) and 174A from its definition of the IRC.
- Because HB 7031 operates retroactively to January 1, 2026, taxpayers that have already filed a Florida corporate income tax return on a pre-conformity basis may need to file an amended return on Form F-1120X. Affected taxpayers must also recompute federal taxable income for Line 1 of Form F-1120 and attach a pro forma federal return reflecting Florida’s decoupled provisions.
Background
On June 11, 2026, Florida Governor Ron DeSantis signed HB 7031 updating Florida’s corporate income tax code to conform to the IRC as amended and in effect on January 1, 2026, subject to specified exceptions.
The legislation follows the enactment of Public Law 119-21, commonly referred to as OBBBA, on July 4, 2025. Since Florida is a fixed-date conformity state and previously conformed to the IRC as of January 1, 2025, the federal changes from OBBBA generally required Florida legislative action before they would be incorporated into Florida corporate income tax law.
Conformity to Key OBBBA Provisions
OBBBA made significant changes to several IRC provisions relevant to corporate taxpayers. Florida generally updated its IRC conformity date to January 1, 2026 but decoupled from OBBBA’s amendments to certain provisions, as summarized in the following table and detail below:
| IRC Section | Federal Post OBBBA | Florida Treatment under HB 7031 |
|---|---|---|
| Section 168(k) | Permanent 100% bonus for property acquired and placed in service after 1/19/2025 | Retains 1/1/2025 version; existing FL addback/one-seventh subtraction regime continues for assets placed in service before 1/1/2027 |
| Section 168(n) | New QPP election, 100% deduction | Excluded from Florida’s definition of the IRC |
| Section 174(a) | Foreign R&E only, 15-year capitalization | Retains 1/1/2025 version |
| Section 174A | Immediate expensing (or ≥60-month capitalization) for domestic R&E | Excluded from Florida’s definition of the IRC |
| Section 163(j) | EBITDA-style ATI restored; expanded floor plan financing | Retains 1/1/2025 version; EBIT-style ATI |
| Section 274 | Tightened deductions for meals/entertainment with exceptions | Retains 1/1/2025 version |
| Section 179 | $2.5M cap / $4M phase-out | Retains 1/1/2025 version; $1.25M cap / $3.13M phase-out |
For federal purposes, OBBBA repealed the scheduled phaseout of IRC Section 168(k) bonus depreciation. It allows permanent 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025. Florida retains IRC Section 168(k) as amended and in effect on January 1, 2025. Florida also continues to apply its existing bonus depreciation decoupling regime requiring a bonus depreciation addback for assets placed in service before January 1, 2027. The corresponding subtraction is one-seventh of the addback per year over seven years beginning with the year of the addback. A separate Florida modification also applies to qualified improvement property placed in service on or after January 1, 2018.
New IRC Section 168(n), added by OBBBA, permits an election for 100% depreciation for certain nonresidential real property used in qualified domestic manufacturing, production, or refining activities (qualified production property or QPP). Florida expressly excludes new IRC Section 168(n) from its definition of the IRC. Taxpayers making a federal IRC Section 168(n) election should evaluate the Florida impact separately.
OBBBA also added IRC Section 174A which generally permits taxpayers to immediately deduct domestic research and experimental expenditures or elect to capitalize and amortize those expenditures over a period of not less than 60 months. OBBBA also limits IRC Section 174 to foreign research and experimental expenditures, which must be capitalized and amortized over 15 years. Florida retains IRC Section 174(a) as amended and in effect on January 1, 2025 and excludes new IRC Section 174A from its definition of the IRC. Therefore, taxpayers deducting domestic research costs for federal purposes under IRC Section 174A should evaluate the impact for Florida corporate income tax purposes.
Federally, OBBBA modified IRC Section 163(j) by restoring an earnings before interest, taxes, depreciation, and amortization (EBITDA) style adjusted taxable income (ATI) calculation for tax years beginning after December 31, 2024. OBBBA also expanded floor plan financing treatment for certain trailers and campers and added related coordination rules. Florida retains IRC Section 163(j) as amended and in effect on January 1, 2025. Therefore, taxpayers should compute a separate Section 163(j) limitation using the pre-OBBBA earnings before interest and taxes (EBIT) based ATI calculation.
For IRC Section 274, OBBBA tightened the deduction for employer-provided meals, with exceptions preserved for meals/entertainment sold to customers and certain industry-specific settings. Because Florida retains the pre-OBBBA version of IRC Section 274 as amended and in effect on January 1, 2025, these federal changes do not flow through for Florida corporate income tax purposes. Affected taxpayers should evaluate whether a Florida modification is required.
Lastly, OBBBA increased the IRC Section 179 expensing limit to $2.5 million and increased the phase-out threshold to $4 million for property placed in service in tax years beginning after December 31, 2024. Both amounts are indexed for inflation for tax years beginning after 2025. Florida does not conform to those amendments because HB 7031 retains IRC Section 179 as amended and in effect on January 1, 2025. Taxpayers claiming enhanced federal IRC Section 179 deductions should evaluate whether a Florida modification is required in computing Florida net income.
Action Items
The Florida tax legislation adds complexity due to the number of federal conformity changes and differing effective dates. Taxpayers should evaluate the Florida impact of OBBBA on a provision-by-provision basis. Specific action items include:
- Identify Florida corporate income tax returns already filed on an OBBBA pre-conformity basis and evaluate whether an amended return is required. The DOR has indicated it will work with affected taxpayers to resolve penalties directly attributable to these conformity changes.
- Model the cash and effective tax rate impacts of the decoupled provisions for Florida corporate income tax purposes. Adjust Florida quarterly estimate and extension payments accordingly.
- Based on the decoupled provisions, prepare a pro forma federal return reflecting recomputed federal taxable income for Line 1 of Form F-1120 along with supporting workpapers.
How Forvis Mazars Can Help
Forvis Mazars can help you evaluate the Florida corporate income tax impact of OBBBA on a provision-by-provision basis, model the cash and effective tax rate consequences of Florida’s conformity changes, and prepare the corresponding federal and state returns. For questions on how these Florida conformity changes may affect your organization, please contact the authors or your Forvis Mazars State and Local Tax advisor.