Florida Eliminates Sales Tax

Florida Eliminates Sales Tax on Commercial Rent

What’s Changing:

For decades, Florida has stood out as the only U.S. state imposing a sales tax on commercial lease and license payments for real property. Berkowitz Pollack Brant Advisors + CPAs+1 Under HB 7031, the tax (commonly called the Business Rent Tax) is being repealed in full. Thus, Florida eliminates sales tax at the state-level tax and the local discretionary surtax on commercial leases effective for occupancy periods beginning October 1, 2025. Holland & Knight+1

Tenants:

Immediate savings: For example, a business with a $5,000/month lease paying a 2% sales tax would save at least $100/month, or $1,200/year, starting with occupancy beginning October 1.
Lease review: Examine your lease documents for any clause referencing “applicable sales tax” on rent or pass-through charges (common area maintenance, utilities, insurance, etc.). After October 1, those tax-charged items tied to occupancy periods after that date should no longer include tax. Holland & Knight+1
Automated payments / sublease arrangements: If your rent payment includes a tax portion, update your payment instructions. For subleases, notify subtenants of the change.
Pre-paid rent or late payments: Even if rent is paid after October 1, if it covers occupancy before October 1, the tax still applies. For example, September rent paid in October still is subject to tax. Gunster+1

Landlords & Property-Managers:

Update billing and invoices: Beginning with occupancy October 1 onward, rent invoices should remove the sales tax portion. Systems and templates must be updated accordingly. Bilzin Sumberg+1
Remit taxes due through September 30, 2025: Ensure all sales taxes collected (or due) for occupancy up to Sept 30 are correctly remitted—even if payment is delayed. CohnReznick
Communication with tenants: Send tenants a notice explaining the coming change, how it affects their rent and billing, and whenthe tax portion drops off. Clear communication will reduce confusion.
Sales Tax accounts: If you currently maintain a sales tax account in Florida and your only taxable activity was the commercial lease tax, you may consider closing the account once all taxes are remitted and no further taxable activity occurs. However, continue to monitor for any audit exposure. Greenberg Traurig

What Isn’t Changing:

The repeal applies only to leases of commercial real property under Section 212.031, Florida Statutes. Williams Parker
Certain rental/lease categories remain taxable:
- Short-term residential rentals (less than six months) under Section 212.03. National Law Review
- Parking facilities, boat slips/docks, aircraft hangars. Gunster
- Rentals of tangible personal property (equipment, forklifts, etc.) remain taxable. Greenberg Traurig
The key rule: The tax applies based on occupancy period, not payment date. So if payment covers a period before October 1, tax is due even if paid after. CohnReznick

The Bottom Line:

With the tax on commercial rent eliminated effective October 1, 2025, Florida is making its leasing climate more business-friendly. Tenants will see real savings; landlords will benefit from simpler billing and compliance. But the transition must be managed carefully: review leases, update invoicing systems, communicate with all parties, and ensure tax obligations prior to the cutoff are addressed.

Action items right away:

Tenants: check your lease and future invoices, update payments.
Landlords/Managers: update billing systems, notify tenants, remit prior taxes properly.
Both: ask your tax/legal advisor about how this change affects your specific lease, especially if there are pass-through cost items or late payment adjustments.

Florida’s commercial leasing landscape is about to get a lot more competitive. Prepare now to take full advantage of the change.

Let us help you find the right space, negotiate the best deal, and open your doors with confidence!

Raissa Restivo (201) 452-9462

Alex Martinez (561) 561-2280

info@medofficespaces.com

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