What Changed?
Florida has repealed its commercial rent tax, previously the only statewide tax of its kind, effective October 1, 2025. Governor Ron DeSantis signed House Bill 7031 into law on June 30, ending a decade-long effort to eliminate what many considered a burdensome tax on commercial leases, thereby increasing tax savings for businesses.
Background
Since 1969, Florida has taxed rent paid by businesses for commercial real estate, including office space, retail stores, warehouses, convention space and similar properties. The tax rate, originally set at 4% in 1968, rose to 6%, aligning with the state’s general sales tax.
In practice, any rent or license fee paid for business use of real property was taxable. Related payments, such as a tenant covering an owner’s property taxes or insurance, were also treated as taxable rent. Local jurisdictions could add discretionary sales taxes on top of the state rate.
Phaseout Timeline
The tax rate began to decline in 2017 and dropped to 2% on June 1, 2024. The repeal was finalized during the spring 2025 legislative session as part of a broader tax package, eliminating both state and local surtaxes on commercial property leases for occupancy periods beginning on October 1, 2025.
What Remains Taxable?
This change does not apply to all types of rental property. Short-term rentals, including those defined as less than six months, as well as self-storage units, boat slips and parking facilities, remain taxable under separate statutes.
What To Do Now?
Landlords and tenants should review commercial leases, update systems used for lease payments, and confirm that sales tax filings accurately reflect the repeal, effective October 1.
Your Guide Forward
Cherry Bekaert’s State & Local Tax team is available to help businesses understand how this repeal may affect their lease agreements and compliance processes. Our team can assist with reviewing lease terms, updating tax systems and preparing for the October 1 transition.
