Florida Depreciation Rules: A Business Owner's Guide
By Timothy LeGendre, CPA · Florida License #AC62625 · Published 2026-08-20
A Florida CPA's guide to Florida depreciation rules: why pass-throughs owe no state tax and how the C-Corp bonus depreciation addback works.
The Short Answer
For most Florida business owners, there is no such thing as a separate "Florida depreciation rule." Florida has no personal income tax, so if you run your business as a sole proprietor, a single-member LLC, a partnership, or an S-Corp, your depreciation, Section 179, bonus depreciation, and all, is a purely federal calculation that never touches a Florida return. The one place Florida's own depreciation rules bite is the corporate income tax, which applies to C corporations. There, Florida decouples from federal bonus depreciation: it makes a C corporation add the bonus back and recover it one-seventh at a time over seven years. And as of 2026, Florida deliberately did not follow the One Big Beautiful Bill Act's depreciation changes, so a C corporation cannot assume its federal numbers carry straight onto the state return.
Why most Florida businesses never see a state depreciation rule
Start with the single fact that makes Florida easy: the state does not tax the income of individuals. That is not a policy that could change on a legislative whim, it is written into Article VII of the Florida Constitution, which prohibits a state tax on the income of natural persons. There is no Florida Form 1040 equivalent, no state schedule, nothing.
That constitutional fact quietly answers the depreciation question for the large majority of my clients. A sole proprietor reports on Schedule C. A partnership passes its income through to the partners. An S corporation passes its income through to the shareholders. A single-member LLC is a Schedule C by default. In every one of those cases the business income, and every depreciation deduction inside it, lands on an individual's federal return, and Florida does not tax that individual. So the depreciation choices you make, whether to take Section 179, how much bonus depreciation to claim, how to handle a vehicle, are federal decisions with a purely federal payoff.
This is genuinely good news, and it is why I tell pass-through clients not to go looking for a "Florida depreciation adjustment." There isn't one for you. If you want the depreciation rules that actually govern your equipment purchases, they're federal, and I cover the two that matter most in my Section 179 guide and my business vehicle deduction guide.
The one business that does deal with Florida depreciation rules
Florida does levy one income tax: the corporate income/franchise tax, under Chapter 220 of the Florida Statutes. It applies to C corporations and to any entity taxed federally as a corporation, and it is filed on Form F-1120. The rate is 5.5% for tax years beginning on or after January 1, 2022 (it had briefly dropped to 3.535% for the 2021 year under a temporary rate reduction), and a corporation subtracts a $50,000 exemption before applying the rate.
The mechanism matters for depreciation. Florida's corporate tax "piggybacks" the federal system: it starts from your federal taxable income and then makes a short list of Florida-specific additions and subtractions to get to Florida net income. Depreciation is on that list. So the reason a C corporation has to think about Florida depreciation rules is structural, the state uses your federal number as its starting point, then reaches in and changes how a few depreciation items are treated.
One clarification that saves confusion: an S corporation generally does not file a Florida corporate return, because its income is taxed to the shareholders, not the entity. The narrow exception is an S corporation that owes federal income tax at the entity level, a built-in gains tax, for instance, which can require a Florida filing. Partnerships file an informational Florida return (Form F-1065) but pay no entity-level Florida tax. If you are not a C corporation, the rest of this article is background rather than homework.
Where Florida breaks from the federal depreciation rules
When a C corporation's federal return uses one of the accelerated depreciation breaks, Florida doesn't just accept it. The state decouples from several federal provisions, meaning it computes its own version. Here is how the big three depreciation items line up on a federal return versus a Florida corporate return, as of the 2026 tax year:
| Item | Federal return | Florida corporate return |
|---|---|---|
| Bonus depreciation (IRC §168(k)) | Up to 100% of the cost expensed in year one | Added back, then deducted 1/7 a year over seven years |
| Section 179 expensing (IRC §179) | Higher post-OBBBA limit, recomputed at the Jan 1, 2025 version | Uses the pre-OBBBA (Jan 1, 2025) version of the rule |
| Qualified improvement property | Depreciated (often bonus-eligible) under federal rules | Added back, with a corresponding Florida subtraction |
| Who this touches | Every business, on the federal return | Only C corporations and entities taxed as corporations |
The headline decoupling, and the one people mean when they search "does Florida follow bonus depreciation," is bonus depreciation. Florida has declined to conform to the first-year bonus deduction for years, and it still does: Section 220.13(1)(e), Florida Statutes, requires the addback for assets placed in service before January 1, 2027. Qualified improvement property, interior improvements to nonresidential buildings, gets a similar addback with its own offsetting subtraction. Section 179 is decoupled in a subtler way I'll come back to.
How the bonus depreciation addback actually works
The addback is a timing rule, not a penalty. Florida doesn't take the deduction away, it makes you spread it out. Here is the two-step mechanic under Section 220.13(1)(e), Florida Statutes:
- •Step one, the addback. In the year you place the asset in service, you add the bonus depreciation you deducted federally back to income on the Florida return.
- •Step two, the seven-year giveback. Starting that same year, you subtract one-seventh of the added-back amount each year for seven years, until the whole deduction has come back through.
Take a worked example with stated assumptions. Suppose a Florida C corporation buys and places in service $70,000 of equipment in 2026 and fully expenses it federally with 100% bonus depreciation. Federally, taxable income drops by the full $70,000 this year. On the Florida return, that $70,000 is added back and instead deducted at about $10,000 a year for seven years. In year one, Florida taxable income is roughly $60,000 higher than the federal figure would suggest, which at the 5.5% rate is on the order of $3,300 more Florida tax up front, recovered over the following six years as the subtractions come through.
The takeaway isn't the exact dollar, it's the shape: a heavy equipment year that wipes out your federal bill will not wipe out your Florida corporate bill, because the state stretches the deduction. For a C corporation planning a large capital purchase, that state-side timing is a real cash-flow item to model, not a footnote.
Run a C corporation in Florida? Let's model the depreciation timing.
Bonus depreciation that zeroes out your federal bill can still leave a Florida corporate bill. I'll show you the state-side timing on your specific numbers on a 30-minute discovery call.
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The 2026 twist: Florida decoupled from the One Big Beautiful Bill Act
This is the part most articles are already stale on. The federal One Big Beautiful Bill Act, signed in July 2025, restored 100% bonus depreciation permanently for qualifying property acquired and placed in service after January 19, 2025, and raised the federal Section 179 limit to $2.5 million. For a federal return, that's a big, taxpayer-friendly change.
Florida chose not to come along. Under Chapter 2026-137, Laws of Florida, the state adopted the Internal Revenue Code retroactively to January 1, 2026, but explicitly held five sections at the version in effect on January 1, 2025, before the One Big Beautiful Bill Act touched them: Section 168(k) bonus depreciation, Section 179 expensing, Section 174(a) research amortization, the Section 163(j) business interest limitation, and Section 274. In plain terms: for a Florida corporate return, the federal depreciation enhancements from the 2025 law simply don't exist.
That is why Section 179 is decoupled in a quieter way than bonus depreciation. There is no separate one-seventh addback line for it. Instead, a C corporation has to recompute its federal taxable income using Florida's frozen January 1, 2025 version of these sections, and attach a pro forma federal return showing the recomputed number as the starting point for Form F-1120. The federal Section 179 amount doesn't carry straight over, it gets rebuilt at the state's conformity date.
Watch the timing on already-filed returns. Because Florida's 2026 conformity update was enacted partway through the year, some corporations filed a Florida return on the old basis before the rules were settled. Florida's Department of Revenue has said those taxpayers may need to file an amended Florida return (Form F-1120X) and will work with them on any resulting penalty. If your C corporation already filed a 2026 Florida return, this is worth a second look before the amended-return window matters.
Why this is really a bookkeeping problem
Every rule above runs on one thing: an accurate fixed-asset schedule. To add back bonus depreciation and then release one-seventh of it for seven years, you have to know, for each asset, what it cost, when it was placed in service, how much bonus you took, and where you are in the seven-year clock. Miss an asset, or lose track of which year a giveback started, and the Florida return quietly drifts from the federal one until an examiner finds the gap.
This is where doing the books and the return under one roof pays off. Because I see equipment purchases hit the ledger as they happen, the depreciation treatment, federal and Florida, gets set up correctly the first time and carried forward year to year, instead of being reconstructed from receipts every spring. For an equipment-heavy business, that continuity is the difference between a clean multi-year depreciation trail and an annual scramble. My Florida S-Corp guide covers the related question of whether a C corporation is even the right entity for you in a no-personal-income-tax state, which is often the more valuable conversation.
And a fair caveat: this article is about Florida. If your corporation earns income in other states, each of those states has its own depreciation conformity rules, and the interplay is genuinely a case-by-case analysis rather than something to assume from a guide.
How I handle this for clients
For the pass-through owners who make up most of my practice, my job on depreciation is to get the federal decision right, which year a deduction saves the most tax, and whether to run it through Section 179, bonus, or both, without any Florida complication to worry about. For the C corporations, I keep the federal and Florida depreciation schedules reconciled from the start, model the state-side timing before a big equipment purchase, and make sure the pro forma federal return and the addback math on Form F-1120 actually agree.
If you're a Florida C corporation weighing a large capital purchase, or you're just not sure whether Florida's rules touch your business at all, that's exactly the kind of question worth a straight answer. I'm in Mount Dora and I work with businesses across Lake County, Seminole County, and remotely throughout Florida. The first conversation is a 30-minute discovery call, and the figures in this guide are current as of the 2026 tax year.
Frequently asked questions
- Does Florida conform to federal bonus depreciation?
- Not for the Florida corporate income tax. A corporation filing a Florida return has to add back the bonus depreciation it deducted federally under Section 168(k) and then recover that amount through a subtraction spread over seven years, one-seventh a year, under Section 220.13(1)(e), Florida Statutes. So the deduction is not lost, only slowed down. For everyone else, sole proprietors, single-member LLCs, partnerships, and S-Corp owners reporting on their personal returns, Florida has no personal income tax, so bonus depreciation is a purely federal question with no Florida adjustment at all.
- Do Florida depreciation rules affect my S-Corp or LLC?
- Almost always no. Florida has no personal income tax, so if you are a sole proprietor, a single-member LLC, a partnership, or an S-Corp owner reporting the business income on your own Form 1040, there is no separate Florida depreciation calculation to make. Your Section 179 and bonus depreciation are federal and stop there. The Florida decoupling rules live inside the Florida corporate income tax, which applies to C corporations and entities taxed as corporations. The narrow exception is an S corporation that owes federal tax at the entity level (for example, built-in gains), which can pull it onto a Florida return.
- What is the Florida corporate income tax rate?
- The Florida corporate income/franchise tax rate is 5.5% for tax years beginning on or after January 1, 2022 (it had dipped to 3.535% for 2021 under a temporary rate reduction). A corporation subtracts a $50,000 exemption before applying the rate, and files Form F-1120. C corporations and entities taxed federally as corporations file it; partnerships file an informational F-1065 and pay no entity-level tax; and individuals owe nothing to Florida because there is no personal income tax.
- How does Florida's bonus depreciation addback actually work?
- On the Florida corporate return, the amount deducted as federal bonus depreciation for assets placed in service before January 1, 2027 is added back to income, then given back through an annual subtraction equal to one-seventh of that addition, beginning in the year of the addback and running for seven years. Picture a C corporation that fully expenses $70,000 of equipment federally in 2026: on the Florida return that $70,000 comes back into income and is instead deducted at roughly $10,000 a year for seven years. The full deduction still arrives, just on a much slower clock, which is a timing difference rather than a permanent one.
- Did Florida adopt the One Big Beautiful Bill Act depreciation changes?
- No. Chapter 2026-137, Laws of Florida, adopted the Internal Revenue Code retroactively to January 1, 2026 but deliberately kept Section 168(k) bonus depreciation, Section 179 expensing, Section 174(a) research amortization, the Section 163(j) interest limitation, and Section 274 as they stood on January 1, 2025, before the One Big Beautiful Bill Act. So a Florida C corporation cannot assume the federal 100% bonus depreciation or the higher federal Section 179 limit carries onto its Florida return. It recomputes federal taxable income at Florida's frozen conformity date and attaches a pro forma federal return to show the math, and some corporations that already filed may need to amend.
- Does Florida follow the Section 179 deduction?
- For pass-through owners it never comes up, because Florida has no personal income tax and Section 179 is a federal calculation for them. For a C corporation, Florida uses the version of Section 179 in effect on January 1, 2025, before the One Big Beautiful Bill Act raised the federal limit, so the federal Section 179 amount cannot simply be assumed onto the Florida return. The corporation recomputes its starting federal taxable income under Florida's conformity date on the pro forma federal return it attaches to Form F-1120.