Article
Prepare for Florida to exempt commercial rent from state sales tax
Aug. 5, 2025 · Authored by Bob Johnson
In a major shift in tax policy, Florida will eliminate the state sales tax on commercial rent effective Oct. 1, 2025. This long-anticipated change will significantly reduce the cost of leasing commercial space across the state and bring Florida into closer alignment with most U.S. jurisdictions that don’t impose a tax on commercial leases.
The upcoming elimination of Florida’s state sales tax on commercial rent is a significant win for Florida businesses. With the effective date of Oct. 1, 2025, now set, landlords and tenants have time to prepare systems, leases, and tax filings to comply with the updated law.
As one of the most impactful tax policy shifts in Florida in recent years, this change enhances Florida’s competitiveness in attracting and retaining commercial tenants. While local taxes still apply, the overall burden on businesses will decline meaningfully.
What to expect
As of Oct. 1, 2025, the state portion of sales tax — currently 2% — on commercial rent will be fully repealed. This means landlords will no longer be required to collect and remit Florida state sales tax on commercial lease payments made on or after that date.
However, local discretionary sales taxes imposed by counties will remain in effect. These local surtaxes range from 0.0% to 2.0% depending on the county and continue to apply to commercial rent. The Florida Department of Revenue (DOR) will continue to publish updated surtax rates annually.
History of Florida’s commercial rent tax
For decades, Florida stood alone as the only U.S. state that levied a sales tax on commercial rent. Under Florida Statutes § 212.031, the tax applied to leases of commercial real estate such as office buildings, retail stores, industrial warehouses, and storage facilities. The law required landlords to collect and remit sales tax on all amounts charged for the use of commercial property, including base rent, common area maintenance (CAM), and other pass-through costs.
Originally imposed at a 6% state rate, the tax was long criticized by businesses and economic development groups as an outdated burden that increased the cost of doing business in Florida. Beginning in 2018, the legislature began reducing the tax incrementally. The most significant shift came in 2021, when lawmakers tied future reductions to the health of the state’s Unemployment Compensation Trust Fund. Once the fund reached pre-pandemic levels, the final phase-out would be triggered.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.