Florida may be best known for its sunshine and tourism, but it’s also a rising star in innovation. From aerospace engineering and biotech to manufacturing and software development, the state is home to thousands of companies pushing the boundaries of technology and science. What many of these businesses don’t realize is that they could be earning significant tax savings through the research tax credit Florida offers.
Whether you’re developing a new medical device in Tampa or refining manufacturing processes in Orlando, your R&D activities may qualify for generous financial incentives. Here’s everything you need to know to take advantage of this opportunity.
What Is the Research Tax Credit?
The Research and Development (R&D) Tax Credit, also called the research tax credit, is a federal incentive program established to reward U.S. businesses for investing in innovation. Companies that design, develop, or improve products, processes, techniques, or software may qualify for dollar-for-dollar reductions in their tax liabilities.
In addition to the federal credit, Florida offers its own state-level R&D tax credit for qualified corporate taxpayers. This dual-level benefit can result in substantial savings that can be reinvested into growing your company.
Understanding the Research Tax Credit in Florida
The research tax credit Florida provides is based on qualified research expenditures (QREs) that meet both federal and state requirements. The Florida state credit is equal to 10% of the excess of qualified research expenses over a base amount, with specific rules on eligibility and caps.
Important points to note about Florida’s credit:
- The company must be a C-corporation filing a Florida corporate income tax return.
- The business must be in a targeted industry (e.g., manufacturing, information technology, life sciences, aviation/aerospace, etc.).
- A federal research credit must be claimed to qualify for the Florida credit.
The state caps the total amount of credit available each year, and applications are typically accepted starting March 20th, awarded on a first-come, first-served basis until the cap is reached. Acting early is essential.
Who Qualifies for the Research Tax Credit?
You don’t have to be a tech giant to qualify. Many Florida companies are eligible without realizing it. If your business performs activities that meet the IRS four-part test, you may be able to claim the credit:
- Permitted Purpose: Developing or improving a product, process, or software.
- Elimination of Uncertainty: Trying to resolve unknowns related to feasibility or design.
- Process of Experimentation: Using modeling, simulation, or trial-and-error methods.
- Technological in Nature: Based on principles of engineering, physics, biology, or computer science.
Qualifying industries in Florida often include:
- Aerospace & defense
- Clean energy
- Software and IT
- Biotechnology and life sciences
- Advanced manufacturing
Even activities like custom software development, process optimization, or prototyping may qualify.
What Expenses Are Eligible?
The research tax credit Florida supports includes many types of expenses directly tied to R&D, such as:
- Employee wages for those involved in technical work
- Supplies used in research and testing
- Contract research expenses (usually 65% allowable)
- Cloud computing or leased computers for development
These must be U.S.-based activities and supported with proper documentation.
Why the Credit Matters
The research tax credit in Florida can significantly reduce your business tax burden. Benefits include:
- Cash flow boost: Reduce current or future tax liabilities.
- Payroll tax offset: Small businesses may apply the federal credit toward payroll taxes—up to $500,000 annually.
- State tax relief: Florida’s credit reduces corporate income tax obligations.
- Competitive advantage: Reinvent your R&D budget by reallocating tax savings toward innovation, hiring, or capital investments.
For many startups and SMEs, these savings can be game-changing.
How to Claim the Research Tax Credit
Claiming the credit requires:
- A detailed review of qualifying activities
- Calculation of qualified research expenditures
- Technical documentation and substantiation
- Filing appropriate federal (IRS Form 6765) and Florida forms
Because Florida’s application window is narrow and the credit is capped annually, working with an experienced tax consultant is highly recommended.
That’s where Swanson Reed comes in.
Swanson Reed: Your Partner for R&D Tax Credits
Swanson Reed is a global R&D tax advisory firm with extensive experience in helping Florida businesses claim and maximize their research tax credits. Their experts provide:
- R&D eligibility assessments
- Expense analysis and technical documentation
- Application preparation for both federal and Florida credits
- Audit support and compliance guidance
With a focus on results and compliance, Swanson Reed ensures clients receive every dollar they’re entitled to—without the hassle.
Conclusion
If your Florida-based business is investing in innovation, it’s time to explore the research tax credit Florida offers. From aerospace engineers to app developers, companies across the state are unlocking powerful savings through these credits—and yours could be next.
Let Swanson Reed help you uncover hidden value in your R&D efforts. The sooner you start, the more you could save.
