Florida Ends Sales Tax on Commercial Leases Starting October 2025
On June 30, 2025, Florida Governor Ron DeSantis signed House Bill 7031 into law, officially eliminating the state sales tax on commercial property leases. This historic move makes Florida the first U.S. state to repeal its commercial lease sales tax entirely, a change long requested by the business community.
Effective October 1, 2025, the 2% state sales tax on commercial leases will no longer apply. This change also impacts the additional local discretionary sales surtaxes, which are calculated on top of the base rent for commercial spaces.
What Was the Commercial Lease Tax?
Previously, Florida imposed a 2% state sales tax, plus any local surtax, on rent for commercial real property, including:
- Office buildings
- Retail stores
- Warehouses
- Manufacturing facilities
Florida had been the only state in the nation to charge a sales tax on commercial lease payments, making it a significant cost for business tenants and landlords.
The commercial lease tax was first introduced in 1969 at 5%, eventually rising to 6% before being gradually reduced in recent years. The repeal of Section 212.031 of the Florida Statutes under HB 7031 finally eliminates this tax in full.
Important Timeline
- Until September 30, 2025: The current 2% state sales tax and applicable local surtaxes still apply to all qualifying commercial leases.
- Starting October 1, 2025: No more state sales tax on commercial rent.
- If you pay rent in advance for space used before October 1, tax will still apply to the pre-effective-date portion.
Which Leases Are Still Taxable?
Certain types of rentals and licenses are not covered by the repeal and remain taxable under other Florida statutes:
- Short-term leases (less than 6 months)
- Parking space rentals
- Marina and dock space
- Aircraft hangars
- Equipment or storage unit rentals
Businesses must review the specific type and purpose of the lease to determine whether sales tax still applies.
Who Benefits from This Change?
The repeal offers significant savings for:
- Small and mid-sized businesses leasing office or retail space
- Commercial landlords who collect and remit tax on behalf of tenants
- New companies choosing Florida as a base of operations
- Investors and developers, due to improved affordability and reduced friction in leasing commercial properties
The tax cut is expected to stimulate growth, attract more businesses to Florida, and simplify lease negotiations.
Additional Tax Relief Measures
HB 7031 also introduced permanent sales tax exemptions on certain health and safety products, including:
- Fire extinguishers
- Smoke detectors
- Carbon monoxide alarms
- Sunscreen and insect repellent
- Life jackets and bicycle helmets
These changes aim to make essential safety products more accessible to Floridians.
What’s Next? Anticipated DOR Guidance
The Florida Department of Revenue (DOR) is expected to release official rulemaking and guidance before the October 2025 effective date. This guidance will:
- Clarify which lease types still fall under taxation
- Outline compliance procedures for landlords and tenants
- Address transitional lease agreements and advance payments
Florida’s repeal of the state sales tax on commercial leases is a major victory for the business community, with lasting implications for tenants, landlords, and investors alike. Now is the time to:
- Review your lease terms
- Update billing systems
- Prepare for compliance changes this fall
Need Help?
Our tax advisors can guide you through the transition and help ensure your lease agreements are fully compliant. Contact us today to learn more.
