Florida Bonus Depreciation Rules: Add-Back, Recovery, and Section 179

Florida bonus depreciation rules require you to add back every dollar of federal bonus depreciation you claimed under IRC Section 168(k) when you compute your state corporate income tax, then recover that amount through equal subtractions over seven years.¹ You still get the full deduction. Florida just makes you take it on a slower schedule than the IRS does.

Who the Add-Back Applies To

Florida’s corporate income tax reaches corporations and artificial entities, not natural persons. Sole proprietors, general partnerships, and LLCs taxed as partnerships are outside the corporate tax entirely, and because Florida has no personal income tax, bonus depreciation on those federal returns flows through with no state adjustment at all.²

If you file Form F-1120 as a C-corporation or S-corporation, the add-back applies to you. A $50,000 exemption from corporate net income softens the hit for smaller filers.

How the Add-Back Works

Florida starts its tax calculation from your federal taxable income, which already reflects whatever bonus depreciation you deducted. The statute at Florida Statute 220.13(1)(e) neutralizes that by requiring you to add back the entire amount deducted under IRC Sections 167 and 168(k) for property placed in service after December 31, 2007, and before January 1, 2027.¹

The math is simpler than people expect. You add back the full federal bonus depreciation deduction. You do not recompute what regular MACRS would have been and net the difference.³

A worked example. Your business buys $500,000 of equipment in 2026 and claims the 20% federal bonus depreciation, deducting $100,000 immediately on the federal return. You also claim regular first-year MACRS on the remaining $400,000. For Florida, you add back the full $100,000. The regular MACRS stays untouched. Your Florida taxable income goes up by $100,000 in the year of acquisition.

The Seven-Year Recovery

Florida does not permanently deny the deduction. In the same year you make the add-back, you begin subtracting one-seventh of that amount from your Florida taxable income, and the same subtraction repeats for each of the next six years.¹

On the $100,000 add-back above, you subtract roughly $14,286 each year for seven years. By the end of year seven, the full $100,000 is back.

Here is the detail that trips people up: the seven-year recovery continues even if you sell or dispose of the asset. The statute applies the subtraction “notwithstanding any sale or other disposition of the property” and “regardless of whether such property remains in service.”¹ Sell the equipment in year three and you still claim the one-seventh subtraction through year seven. You need to track recovery schedules even for assets no longer on your books.

Qualified Improvement Property Is Treated Differently

One exception matters. The seven-year recovery mechanism does not apply to bonus depreciation claimed on qualified improvement property as defined in IRC Section 168(e)(6).¹ Qualified improvement property generally covers interior improvements to nonresidential buildings, excluding elevators, escalators, and structural changes. For these assets, the add-back still applies, but there is no one-seventh annual subtraction. You claim regular MACRS on the Florida return over the asset’s recovery period instead. Businesses doing heavy tenant improvement or interior renovation work should flag this distinction early.

What the Timing Difference Actually Costs

At Florida’s 5.5% corporate tax rate, a $100,000 add-back translates to an extra $5,500 of Florida tax in year one, assuming the amount sits in your taxable bracket.⁴ Each of the following six years, the $14,286 subtraction cuts your Florida tax by about $786. All the money comes back. What you lose is the time value of the cash in between, and on large capital investments that adds up.

Section 179 Is the Workaround

Florida’s treatment of the federal Section 179 deduction is more favorable. An old add-back provision for Section 179 amounts over $128,000 applied only to taxable years beginning after December 31, 2007, and before January 1, 2015.¹ For 2026, no active add-back touches Section 179, so Florida conforms fully to the federal deduction.

That is a real planning opening. To the extent your purchases fit within the federal Section 179 caps, you can expense them immediately on both the federal and Florida returns with no state adjustment. Section 179 has lower limits than bonus depreciation historically allowed, and the deduction cannot exceed your business’s taxable income for the year. Within those limits, though, Section 179 delivers the upfront Florida deduction that bonus depreciation does not.

Reporting on Form F-1120

The add-back and the recovery subtractions both appear on the Florida Corporate Income/Franchise Tax Return, Form F-1120.⁵ The add-back goes on Schedule I (additions to federal taxable income), specifically Line 21, where you enter the full IRC Section 168(k) special depreciation allowance.⁶ The annual one-seventh subtraction goes on Schedule II (subtractions from federal taxable income).⁷

Each year’s add-back has its own seven-year recovery schedule. If you have been placing assets in service across multiple years, your Schedule II subtraction will stack recoveries from several prior years at once. A tracking spreadsheet listing the original add-back year, the total amount, and the remaining annual subtractions is the practical way to keep this straight at filing time.

What Happens After 2026

Federal bonus depreciation drops to zero for property placed in service on or after January 1, 2027, unless Congress acts. The Florida add-back provision sunsets on the same date, applying only to property placed in service before January 1, 2027.¹ Recovery subtractions from pre-2027 add-backs still run their seven-year course, so the tracking obligation outlives the add-back itself.

1
Florida Senate. Florida Code 220.13 – Adjusted Federal Income Defined
2
The Florida Legislature. Florida Code 220.02 – Legislative Intent
3
Florida Department of Revenue. Tax Information Publication 25C01-01 – Florida Corporate Income Tax Adoption of 2025 Internal Revenue Code
4
Florida Department of Revenue. Tax and Interest Rates
5
Florida Department of Revenue. Corporate Income Tax
6
Florida Department of Revenue. Florida Corporate Income/Franchise Tax Return Instructions
7
Florida Department of Revenue. Florida Corporate Income Tax Adoption of 2024 Internal Revenue Code