Florida Commercial Lease Tax Elimination | Sales Tax Change

Florida Eliminates Commercial Rent Tax, Boosting Business Competitiveness

Florida will permanently abolish state adn local sales taxes on commercial lease payments beginning October 1, 2025, a landmark decision poised to reshape teh state’s economic landscape.The move, enacted through House Bill 7031 (2025), eliminates a longstanding tax burden and aligns Florida with the vast majority of states that do not tax commercial rent.

A Meaningful Shift in Tax Policy

For years, Florida businesses have operated under a tax structure that added to the cost of leasing commercial property. This included office spaces, retail locations, industrial facilities, and warehouses. Now, thanks to the repeal of § 212.031, Florida Statutes, that cost will be removed. “Effective October 1, 2025, section 212.031, Florida Statutes, is repealed,” the law explicitly states.

Did you know? – Florida was one of only a handful of states that taxed commercial rent. This repeal positions the state to be more competitive in attracting and retaining businesses.

Who Benefits and What Remains Taxable?

The repeal specifically targets leases of commercial real property. This means businesses leasing space for their operations will see a reduction in their overall expenses. however,the change does not extend to residential leases,which were already exempt from this tax,nor does it affect short-term or transient rentals – such as those booked through Airbnb – for stays under six months,which will continue to be taxed.

transition and Refund Considerations

Landlords and tenants must proactively prepare for the transition. Any rent payments that cover both periods before and after October 1,2025,will need to be prorated to reflect the tax exemption only for the portion of occupancy occurring on or after that date. A senior official stated that careful accounting will be crucial during this period.

Importantly, there will be no automatic refunds for taxes previously paid on periods now deemed exempt. Businesses seeking reimbursement will need to affirmatively apply for a refund through the florida Department of Revenue.

Pro tip: – Businesses should begin documenting all commercial lease payments now to streamline the refund application process with the Florida Department of Revenue after October 1, 2025.

Driving Economic Growth

The driving force behind this repeal is Florida’s commitment to enhancing its economic competitiveness. By eliminating this tax,the state aims to reduce the cost of doing business and attract new commercial investment. According to the legislation, this change will align Florida with the 49 other states that do not impose a tax on commercial rent. One analyst noted that this could be a significant incentive for businesses considering relocation or expansion.

preparing for the Change

Landlords and tenants are strongly encouraged to begin preparing now. This includes a thorough review of existing lease agreements, updates to billing systems, and ensuring all relevant stakeholders are fully informed of the upcoming changes.

If you have questions or need assistance reviewing your lease portfolio, our team is ready to help.

Reader question: – How do you foresee this tax repeal impacting smaller, locally-owned businesses versus larger corporations in Florida? Share your thoughts!