Florida Corporation Taxes and How to File

Florida offers a distinct business tax environment. While the state has no personal income tax, corporations are subject to specific tax laws. This guide outlines the main corporate tax, its calculation, other business taxes, and procedures for filing and payment.

Florida Corporate Income Tax

The main tax on corporations in Florida is the Corporate Income/Franchise Tax. It is applied to the net income of corporations for the privilege of conducting business in the state. The tax rate is 5.5% on Florida net income and applies to C corporations and other entities that elect to be taxed as corporations for federal purposes.

A corporation’s obligation to pay this tax is determined by “nexus,” which is the connection a business has with the state. Nexus can be established through a physical presence, such as having employees, an office, or property in Florida. Economic nexus is established for out-of-state businesses once their sales into Florida exceed a $100,000 threshold in a calendar year.

The tax treatment varies for different corporate structures. C corporations are directly subject to the Florida Corporate Income Tax. In contrast, S corporations are generally not subject to this tax at the entity level. The income, losses, deductions, and credits of an S corporation typically pass through to the individual shareholders, who then report them on their personal tax returns.

Calculating Florida Net Income

Calculating a corporation’s taxable income in Florida begins with its federal taxable income. This amount is then modified by state-specific additions and subtractions to arrive at “adjusted federal income.” These adjustments account for differences between federal and Florida tax law.

Common additions include interest income from other states’ bonds that is tax-exempt at the federal level. Another addition is the amount of any state and local income taxes deducted on the federal return. These items are added back because Florida does not permit them as deductions.

Subtractions reduce federal taxable income to reflect items that Florida exempts. A significant subtraction is for certain types of foreign-source income, preventing international earnings from being taxed at the state level. Other subtractions can include expenses related to producing tax-exempt income that were not deductible on the federal return.

For corporations operating in multiple states, their adjusted federal income must be apportioned to determine the share taxable by Florida. Florida uses a single-sales factor apportionment formula, based on the ratio of the company’s sales within Florida to its total sales. The calculation is: (Federal Taxable Income + Florida Additions – Florida Subtractions) x (Florida Sales / Total Sales) = Florida Net Income.

Other Major Business Taxes

Beyond the corporate income tax, businesses in Florida are responsible for other taxes tied to specific activities. These non-income-based taxes have their own rules and filing requirements.

Sales and Use Tax

Businesses that sell or rent tangible personal property, admissions, or certain services in Florida are generally required to register and collect sales tax. The statewide sales tax rate is 6%, though many counties impose an additional discretionary sales surtax. Use tax is owed on items purchased tax-free outside of Florida but then brought into the state for use, storage, or consumption.

Reemployment Tax

Corporations with employees must comply with the state’s Reemployment Tax, Florida’s equivalent of unemployment tax. These employer-paid taxes fund the state’s unemployment compensation program. The tax rate for new employers is 2.7% on the first $7,000 of wages paid to each employee, while rates for established businesses vary based on their employment history.

Filing and Paying Corporate Taxes

All corporations subject to the tax must file a Florida Corporate Income/Franchise Tax Return using Form F-1120, even if no tax is due. This form serves as the primary document for reporting calculated net income and tax liability.

Filing deadlines depend on the corporation’s fiscal year. For calendar-year taxpayers, the return is due by May 1 of the following year. For fiscal-year taxpayers, the deadline is the first day of the fifth month after their fiscal year closes. An extension grants an additional six months to file but does not extend the deadline for paying the tax owed.

Corporations that anticipate owing more than $2,500 in Florida corporate income tax for the year must make quarterly estimated tax payments using Form F-1120ES. The due dates for these installments are the last day of the fourth, sixth, and ninth months of the tax year. The final payment is due on the last day of the tax year.

The state mandates electronic filing for any corporation required to file its federal return electronically or for those that paid $5,000 or more in Florida corporate income tax during the previous fiscal year. Payments are also expected to be made electronically through methods like electronic funds transfer.