How the Rent Tax Ended

Florida has stood out from the rest of the U.S. by imposing a sales tax on commercial lease payments. This Business Rent Tax was a persistent cost for businesses of all sizes, affecting all CRE property types. Now, this tax has come to a close. Governor Ron DeSantis has signed Florida House Bill (HB) 7031 into law, which repeals both the state and county sales taxes on commercial leases. This significant change, effective on October 1, 2025, marks a new change that will create a business-friendly landscape for the state.

 

The Impact of HB 7031

With the rent tax gone, its impact is expected to be profound. The tax, which has been in place since 1969, applied not only to base rent, but also to additional charges passed on to tenants. This included common area maintenance fees, property taxes, and utilities. For years, this tax added a layer of complexity and cost to doing business in Florida. The complete elimination of this tax is beneficial for the state’s CRE market and every commercial tenant.

 

Industry experts estimate that this repeal will save Florida businesses more than $1 billion, providing them with more capital to invest in growth, hire new employees, and improve their operations. The savings will be a welcome relief for companies that have long navigated the administrative and financial burden of this tax. The repeal also eliminates the discretionary County Surtax, which varies by county, further reducing costs for businesses.

 

Preparing for the Transition

While the change will be beneficial, both landlords and tenants need to be prepared for the shift. HB 7031 fully repeals Section 212.031 of the Florida Statutes, which is the legal basis for the rent tax. Landlords must update their billing and accounting systems to ensure that sales tax is no longer collected on payments for periods on or after October 1, 2025. They must also properly prorate sales tax for 2025, applying it only to the first three quarters of the year. Similarly, tenants should review their 2025 annual reconciliations and update any automatic payment systems to ensure sales tax is not applied to charges for periods after the effective date.

 

Early coordination between parties is crucial to avoid confusion and ensure a smooth transition. This repeal represents a major change in Florida’s tax policy, solidifying its reputation as a state committed to supporting and attracting businesses.