Florida’s depreciation rules run on two separate tracks. For the corporate income tax, the state begins with your federal taxable income and then requires C-corporations to add back 100% of any federal bonus depreciation, recovering it evenly over seven years; Section 179 expensing, by contrast, has flowed through without adjustment since 2015. For the county-level tangible personal property tax, appraisers use their own state-published depreciation schedules to value your business equipment, and those numbers rarely match what sits on your federal books. Everything below explains how each track works and where they intersect.
How Florida’s Corporate Tax Starts With Your Federal Return
Florida does not build a separate depreciation system for income tax. The state starts with federal taxable income and calls the result, after adjustments, “adjusted federal income.”1Justia Law. Florida Code 220.13 – Adjusted Federal Income Defined As of 2025, Florida conforms to the Internal Revenue Code as it existed on January 1, 2025.2The 2025 Florida Statutes. Florida Code 220.03 – Definitions That conformity means MACRS depreciation carries over from federal to state without a separate calculation. The adjustments come in only where Florida has chosen to depart from federal treatment, and bonus depreciation is the main one.
The tax itself runs at 5.5% on Florida net income above a $50,000 exemption.3The 2025 Florida Statutes. Florida Code 220.11 – Tax Imposed4Florida Senate. Florida Code 220.14 – Exemption Depreciation adjustments matter because they change how much income reaches that rate in any given year.
The Bonus Depreciation Add-Back and Seven-Year Recovery
When your corporation claims bonus depreciation under IRC Section 168(k) on the federal return, Florida requires you to add back 100% of that deduction for assets placed in service before January 1, 2027.1Justia Law. Florida Code 220.13 – Adjusted Federal Income Defined The entire federal bonus deduction is reversed for state purposes in the year you claim it.
The deduction is not lost. You recover the added-back amount in equal installments over seven years, beginning with the year of the add-back. Each year you subtract one-seventh of the total from your Florida taxable income.5Florida Department of Revenue. Florida Corporate Income Tax Adoption of 2025 Internal Revenue Code The seven-year schedule keeps running even if you sell or dispose of the asset before it ends.1Justia Law. Florida Code 220.13 – Adjusted Federal Income Defined
A Worked Example
Say your corporation places $700,000 of qualifying equipment in service in 2026 and claims 100% bonus depreciation federally. For Florida, you add the full $700,000 back to state taxable income in 2026. Then, from 2026 through 2032, you subtract $100,000 each year. The total deduction ends up the same at both levels. Only the timing differs.
At 5.5%, that first-year add-back raises your Florida tax by $38,500 compared to the federal treatment. You get that money back gradually through the annual subtractions, but the cash sits with the state in the meantime. If you place large amounts of equipment in service regularly, model the Florida cash-flow impact separately from the federal benefit.
Tracking Multiple Years of Add-Backs
The adjustments are reported on Form F-1120. If you have add-backs originating in different tax years, each one runs its own seven-year clock, and you may have several overlapping subtraction schedules in any given year. The Department of Revenue does not maintain this record for you, so keep a running schedule of every add-back, the year it started, and the remaining recovery balance.
Section 179 Is No Longer Added Back
Florida used to require an add-back of any Section 179 expense exceeding $128,000, recovered over the same seven-year schedule.1Justia Law. Florida Code 220.13 – Adjusted Federal Income Defined That rule applied only to taxable years beginning after December 31, 2007 and before January 1, 2015.
For taxable years beginning in 2015 or later, there is no Section 179 add-back. The full federal Section 179 deduction flows through to your Florida return. If you are still working through a seven-year recovery from a pre-2015 add-back, those subtractions continue on their original schedule.
What the OBBBA and the 2027 Sunset Mean for Planning
The One Big Beautiful Bill Act, signed in 2025, permanently restored 100% federal bonus depreciation for qualifying property acquired and placed in service after January 19, 2025.6Office of the Law Revision Counsel. 26 USC 168 – Accelerated Cost Recovery System That reverses the phase-down that had been dropping the bonus percentage by 20 points each year since 2023.
Florida’s add-back rule, as written, applies only to assets placed in service before January 1, 2027. If the statute is left alone, bonus depreciation on assets placed in service on or after that date would flow through to the Florida return without an add-back. The Department of Revenue has noted, though, that the OBBBA was enacted after the 2025 session ended and that the legislature will have a chance to respond in the session beginning in January 2026.5Florida Department of Revenue. Florida Corporate Income Tax Adoption of 2025 Internal Revenue Code Lawmakers are likely to update the IRC conformity date, and they may or may not extend the add-back past its current sunset. If you are planning significant capital spending in late 2026 or 2027, watch what happens in that session before assuming the seven-year recovery does or does not apply.
Tangible Personal Property Tax Depreciation
Florida’s second depreciation system has nothing to do with income tax. Every county levies an annual ad valorem tax on tangible personal property: business equipment, furniture, fixtures, and similar assets. County property appraisers use standardized depreciation schedules and life-expectancy guidelines published by the Florida Department of Revenue to estimate value.7Florida Department of Revenue. Tangible Personal Property
These schedules do not match MACRS. Assets grouped by type get an expected economic life and a depreciation factor applied to replacement cost, and the schedules typically leave a residual value. An asset fully depreciated on your federal return can still carry assessed value for property tax purposes, which means you keep paying TPP tax on equipment that has no remaining income-tax basis.
Filing, the April 1 Deadline, and the $25,000 Exemption
Any business owning tangible personal property in Florida on January 1 must file Form DR-405 with the county property appraiser by April 1.8Florida Department of Revenue. Form DR-405 – Tangible Personal Property Tax Return Each return qualifies for an exemption of up to $25,000 of assessed value.9Florida Senate. Florida Code 196.183 – Exemption for Tangible Personal Property The exemption does not apply in any year you fail to file a timely return.10The 2025 Florida Statutes. Florida Code 196.183 – Exemption for Tangible Personal Property
Once your assessed value stays at or below $25,000, you may qualify for a filing waiver after the initial return. If your value later climbs above the exemption and you have not filed, you lose the exemption for that year and face the penalty.
Penalties for Late or Missing Returns
The penalty for a late DR-405 is 5% of the total tax levied on the property covered by the return for each month or part of a month the return is late, capped at 25%.11Florida Department of Revenue. Tangible Personal Property A complete failure to file triggers a flat 25% penalty on the full tax amount.12The 2025 Florida Statutes. Florida Code 193.072 – Penalties for Improper or Late Filing Because the penalty runs against the tax rather than the assessed value, the dollar amount depends on your county’s millage rate.
Depreciation Recapture When You Sell
Selling a depreciated asset for more than its adjusted basis triggers recapture at the federal level, and because Florida starts from federal taxable income, recapture flows through to your state return.
For tangible personal property such as equipment, machinery, and vehicles, IRC Section 1245 treats the gain as ordinary income up to the total depreciation you previously deducted.13Office of the Law Revision Counsel. 26 USC 1245 – Gain From Dispositions of Certain Depreciable Property If you bought a machine for $100,000, depreciated it down to $20,000, and sold it for $75,000, the entire $55,000 gain is ordinary income. Section 179 deductions and bonus depreciation count as depreciation for recapture purposes.
Depreciable real property falls under Section 1250. When the property was depreciated using the straight-line method, the gain attributable to depreciation is taxed federally at a maximum rate of 25%, and any gain above the total depreciation claimed qualifies for standard long-term capital gains rates. Sales are reported on IRS Form 4797, which splits the gain into its ordinary-income and capital-gain components.14Internal Revenue Service. Instructions for Form 4797
The resulting income feeds into federal taxable income and then into your Florida return. If you added back bonus depreciation on the asset in a prior year, your remaining seven-year subtractions keep working in your favor even after the sale.
Individuals and Pass-Through Entities
Florida does not impose a personal income tax. Sole proprietors claim depreciation, including bonus and Section 179, on federal Schedule C, and the net figure flows to their federal individual return.15Internal Revenue Service. Instructions for Schedule C (Form 1040) Florida does not touch that income.
Partnerships and S-corporations calculate depreciation at the entity level and pass income or loss to owners on Schedule K-1. Because owners file no Florida individual return, there is no state form on which an add-back would occur. The bonus depreciation add-back and seven-year recovery apply only to C-corporations and other entities subject to Florida’s corporate income tax.
One thing does not change with entity type: any business that owns assessable equipment in Florida must file the DR-405 by April 1 and will owe tangible personal property tax on the appraised value.