On June 11, 2026, Florida Gov. Ron DeSantis signed legislation adopting the version of the Internal Revenue Code (IRC) in effect as of Jan. 1, 2026, applied retroactively.1 The legislation also decouples the state from certain tax provisions contained in the One Big Beautiful Bill Act (OBBBA)2 and provides guidance on the resulting state modification adjustments.
IRC conformity
Florida traditionally has adopted the IRC on a static conformity basis, and the legislation advances the state’s conformity date from Jan. 1, 2025, to Jan. 1, 2026.3 When expressly authorized by Florida law, IRC amendments are given effect in such manner and for such periods as prescribed in the IRC, to the same extent as if the amendment had been adopted by the Florida legislature.4
Further, an amendment has effect for Florida purposes only to the extent that the amended provision of the IRC is taken into account in the computation of net income subject to Florida taxation.5
OBBBA summary
The enactment of the OBBBA on July 4, 2025, significantly affected federal income taxation through reinstated or modified provisions from the Tax Cuts and Jobs Act of 2017 (TCJA),6 and newly created federal income tax provisions. Notable provisions of the OBBBA which amend sections of the TCJA include reinstating and making permanent the 100% bonus depreciation on qualifying assets under IRC Sec. 168(k) and reverting the adjusted taxable income (ATI) calculation for interest expense limitation purposes to a tax-based earnings before interest, taxes, depreciation and amortization (EBITDA) approach under IRC Sec. 163(j).7
Other provisions of the OBBBA that may materially affect certain taxpayers are the increased exemption cap and phaseout thresholds under IRC Sec. 179 and certain exceptions to the disallowance of the deduction for meals provided to employees for the convenience of the employer under IRC Sec. 274(o).8
The OBBBA also introduced new provisions to the IRC, including reinstating immediate expensing of domestic research and experimental (R&E) costs under IRC Sec. 174A and the 100% depreciation deduction allowed for certain “qualified production property” (QPP) under IRC Sec. 168(n).9
Decoupling from bonus depreciation and small business expensing
Florida continues to decouple from IRC Sec. 168(k) bonus depreciation.10 Florida has historically decoupled from IRC Sec. 168(k) bonus depreciation provisions both before and after the TCJA.
The TCJA allowed 100% bonus depreciation of qualifying assets placed in service from Sept. 27, 2017, through Dec. 31, 2022, with a phase-out of 100% bonus depreciation beginning in 2023 that reduces by 20% each year until reaching 0% beginning in 2027.11 The enactment of the OBBBA removes the phaseout and expiration of 100% bonus depreciation, and effectively makes the deduction permanent for qualifying assets placed in service after Jan. 19, 2025.12
With this legislation, though, the state has created an additional consideration by also specifically conforming to the version of IRC Sec. 168(k) as amended and in effect on Jan. 1, 2025.13 By doing so, taxpayers utilizing this deduction will need to modify their taxable income base by applying pre-OBBBA bonus depreciation percentages for purposes of calculating the decoupling adjustment addback and subsequent deduction of the same amount ratably over seven years, including the year of the addback.14
The remaining amount of bonus depreciation claimed at the federal level is required to be added back and depreciated by applying standard federal depreciation principles, based on the useful lives of the related assets.
Additionally, Florida decouples from the modifications to IRC Sec. 179 made by the OBBBA, which increase the exemption cap and phaseout threshold for small businesses electing to expense certain depreciable business assets.15 The amendments increase the exemption cap to $2,500,000 and the phaseout threshold to $4,000,000 for the 2025 tax year.16 These amounts are indexed by inflation and will increase to $2,560,000 and $4,090,000, respectively, for the 2026 tax year.17
While Florida has previously decoupled from amendments to IRC Sec. 179 for the 2008-2014 tax years,18 it has since conformed to the amounts allowed at the federal level. The state has decoupled from the OBBBA version of IRC Sec. 179 by specifically conforming to the version of the IRC section as amended and in effect on Jan. 1, 2025.19
Similar to the modifications required for bonus depreciation purposes, taxpayers utilizing this deduction will need to separately calculate the allowed amount for Florida purposes using the pre-OBBBA exemption cap and phaseout threshold and adjust their taxable income base for the differences due to decoupling.
Decoupling from QPP depreciation
Florida decouples from the newly created IRC Sec. 168(n), which allows certain QPP to be immediately expensed for 100% of the cost in the year the property is placed in service. Property qualifying for this treatment includes nonresidential real property that, among other requirements, is used as an integral part of a qualified production activity such as the manufacturing, production or refining of tangible personal property.20
Notably, large assets such as manufacturing buildings, which are generally depreciated over 39 years, may meet the requirements needed for immediate expensing at the federal level while creating a significant state-level modification adjustment. The state has decoupled from IRC Sec. 168(n) and does not provide an alternative form of accelerated depreciation.21 Taxpayers may need to modify their taxable income base to add back the amount deducted under IRC Sec. 168(n) and deduct an amount of depreciation for the related assets following the standard methods provided under IRC Secs. 167 and 168.
Decoupling from immediate expensing of domestic research and experimental costs
Florida decouples from the newly created IRC Sec. 174A, which allows for the immediate expensing of certain domestic R&E costs.22 For tax years beginning prior to Jan. 1, 2022, certain R&E costs were fully deductible in the year they were incurred.23
Following the enactment of the TCJA, for tax years beginning on or after Jan. 1, 2022, these costs were no longer deductible in the year they were incurred and instead had to be capitalized then amortized over a period of five years for domestic related costs and 15 years for foreign (non-U.S.) related costs.24
The OBBBA has further modified the treatment of these deductions by reinstating the immediate expensing of domestic-related costs for taxable years beginning after Dec. 31, 2024, through the creation of IRC Sec. 174A. Additionally, the OBBBA allows certain small businesses to retroactively apply the deduction for taxable years beginning after Dec. 31, 2021, and allows for all taxpayers to deduct unamortized amounts of domestic costs incurred in 2022, 2023, and 2024 on their 2025 and/or 2026 tax year returns.25
While Florida previously conformed to both the pre-TCJA and TCJA treatment of IRC Sec. 174 related to the deduction of R&E costs, it has decoupled from the newly created IRC Sec. 174A and its treatment of domestic-related costs. Instead, the state follows the version of IRC Sec. 174 as amended and in effect on Jan. 1, 2025.26 For the 2025 tax year, a modification adjustment will be necessary to limit the deduction of domestic R&E costs incurred during the tax year and the deduction for any unamortized amount of those costs from prior years utilized at the federal level.
Certain small business taxpayers that retroactively apply IRC Sec. 174A through amended federal returns should consider the impact at the state level. Generally, Florida requires an amended return if there are adjustments to the federal income tax return due to amendment, claim for refund, or examination and would require similar adjustments for IRC Sec. 174A decoupling.
Decoupling from interest expense limitation
Florida decouples from the modifications to IRC Sec. 163(j) made by the OBBBA, which revert the calculation of ATI to a tax-based EBITDA approach and results in a larger business interest expense limitation than was allowed for the 2022, 2023 and 2024 tax years.27 The state has decoupled from this provision of the OBBBA by specifically conforming to IRC Sec. 163(j) as amended and in effect on Jan. 1, 2025.
Historically, Florida has largely conformed to the pre-TCJA and TCJA federal treatment of business interest expense under IRC Sec. 163(j), with an exception for the Coronavirus Aid, Relief, and Economic Security (CARES) Act provisions which temporarily increased the limitation percentage of ATI for federal income tax purposes.28
For the 2025 tax year, taxpayers may need to separately compute the business interest expense limitation by following a tax-based EBIT approach to computing ATI. This could result in a modification to the business interest expense deduction. Additionally, a separate carryover schedule for any disallowed business interest expense should be maintained due to decoupling differences related to CARES Act and OBBBA provisions.
Decoupling from certain business meal deductions
Florida decouples from the modifications to IRC Sec. 274 related to the exception to the disallowance of certain business meal costs.29 Following the TCJA, beginning in the 2026 tax year, a deduction for meals provided to employees for the convenience of the employer and the costs of certain eating facilities for employees are disallowed under IRC Sec. 274(o).30 The OBBBA provides exceptions to this provision, which allow certain businesses to deduct these costs.31
Florida has generally conformed to the federal provisions related to IRC Sec. 274, with an exception for the temporary increase in allowable deductions under the Consolidated Appropriations Act of 2021.32 The state decouples from the modifications made by the OBBBA by specifically conforming to IRC Sec. 274 as amended and in effect on Jan. 1, 2025.
Florida DOR provided emergency rulemaking authority
The conformity bill also provides the Florida Department of Revenue (Department) with emergency rulemaking authority.33 The Department has existing rulemaking authority to administer related tax legislation,34 but the grant of emergency rulemaking authority allows the agency to expedite the adoption of rules necessary to implement the bill. In general, rulemaking authority provides the Department with the ability to create, amend, or repeal administrative rules necessary to implement tax legislation enacted by the state.
Commentary
A key factor in enacting IRC conformity legislation in Florida and many states is the impact on estimated tax revenues in current and/or future fiscal years. Many notable provisions of the OBBBA provide taxpayers with significant tax relief that, depending on state conformity, could be reflected at the state level as well. Regarding Florida, the Revenue Estimating Conference (REC) determined that conforming to the IRC in effect on Jan. 1, 2026, without any modification, would have resulted in a reduction to the state’s General Revenue Fund of $3.484 billion in the 2026-2027 fiscal year.35
Following the state’s response to the OBBBA and decoupling for the major provisions that would impact tax revenues, the REC later determined that the conformity bill would have no impact on expected tax revenues.36
Following the enactment of the conformity bill, the Department published a Tax Information Publication (TIP) on July 7, 2026, providing additional guidance regarding changes in tax laws due to the bill and how to report the information for compliance purposes.37 As part of the TIP, the Department states that taxpayers may be required to amend their Florida corporate income/franchise tax returns due to guidance being released after they may have already filed their returns.
In these scenarios, the state plans to work with affected taxpayers to resolve any penalties imposed on an amended return due to the items mentioned in the TIP. Further correspondence with the Department has confirmed that the modifications to the taxable income base for IRC Sec. 168(k) and Sec. 179 will comprise multiple components to be separately reported within the return, which will create added layers of complexity in tracking these modifications going forward.
While Florida has historically decoupled from many federal provisions providing significant tax relief in the past, taxpayers had to evaluate what position the state would take regarding the OBBBA prior to receiving guidance. Now that the tax law changes have been enacted, taxpayers should reevaluate the impact they may have on their Florida tax liability regarding amounts reported on filed returns, estimated payments, and financial statements.
1 Ch. 137 (H.B. 7031), Laws 2026.
2 P.L. 119-21 (2025).
3 FLA. STAT. ANN. §§ 220.03(1)(n); 220.03(2)(c).
4 FLA. STAT. ANN. § 220.03(3).
5 Id.
6 P.L. 115-97 (2017).
7 P.L. 119-21 (2025), § 70301; P.L. 119-21 (2025), § 70303.
8 P.L. 119-21 (2025), §§ 70306, 70305.
9 P.L. 119-21 (2025), §§ 70307, 70302.
10 FLA. STAT. ANN. § 220.13(1)(e)1.
11 P.L. 115-97 (2017), § 13201.
12 P.L. 119-21 (2025), § 70301.
13 FLA. STAT. ANN. §§ 220.03(1)(n)2.
14 FLA. STAT. ANN. § 220.13(1)(e)1.a, b.
15 FLA. STAT. ANN. § 220.03(1)(n)2.
17 IRS Pub. 946.
18 FLA. STAT. ANN. § 220.13(1)(e)2.
19 FLA. STAT. ANN. § 220.03(1)(n)3.
20 IRC § 168(n)(2)(A).
21 FLA. STAT. ANN. § 220.03(1)(n)3.
22 FLA. STAT. ANN. § 220.03(1)(n)2.
23 IRC § 174 prior to enactment of the TCJA.
24 P.L. 115-97 (2017), § 13202; IRC § 174 following enactment of the TCJA.
25 P.L. 119-21 (2025), § 70302; IRC § 174A; Rev. Proc. 2025-28.
26 FLA. STAT. ANN. § 220.03(1)(n)2, 3.
27 FLA. STAT. ANN. § 220.03(1)(n)2.
28 See P. L. 116-136, § 2306; FLA. STAT. ANN. § 220.13(1)(e)4.
29 FLA. STAT. ANN. § 220.03(1)(n)2.
30 P.L. 115-97 (2017); IRC § 274(o) after enactment of the TCJA.
31 P.L. 119-21 (2025), § 70305; IRC § 274(o) after enactment of the OBBBA.
32 Ch. 242 (H.B. 7059), Laws 2021.
33 Ch. 137 (H.B. 7031), Laws 2026, § 3(3).
34 Ch. 137 (H.B. 7031), Laws 2026, § 3(2); FLA. STAT. ANN. §§ 213.05, 213.06.
35 Florida Senate Bill Analysis and Fiscal Impact Statement, Feb. 24, 2026.
36 Florida Senate Bill Analysis and Fiscal Impact Statement, March 3, 2026.
37 Florida Tax Information Publication 26C01-01, July 7, 2026.
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