Florida repeals sales tax on commercial rent

Florida is the only state that taxes the rent on commercial spaces at the time of this publication, though some local governments in other states impose a local commercial rent tax. Effective October 1, 2025, Florida sales tax on commercial rentals is repealed.

• A 2% state sales tax applies to commercial rents in Florida for periods prior to October 1, 2025. Local discretionary sales surtaxes also apply to commercial leases and rents in Florida.
• The 2% sales tax does not apply to rents for periods on and after October 1, even if the rent for those periods was paid prior to October 1.
• Florida is the only state that taxes commercial rents (a tax repealed effective October 1, 2025).

Florida has imposed a business rent tax, also called a commercial lease tax, since 1969.

Florida’s commercial lease tax typically applies not only to base rent but to additional fees charged to tenants, such as common area maintenance fees, insurance, property management fees, utilities, and even real estate taxes. The law states that such charges shall be included in the total rent or license fee subject to tax “whether or not they can be attributed to the ability of the lessor’s or licensor’s property as used or operated to attract customers.”

The Florida Legislature started reducing the business rent tax in 2017 and lowered the state tax to 2% in 2024, though counties could still apply a discretionary County Surtax on commercial rentals. With the enactment of House Bill 7031, both the state and local sales tax on commercial property in Florida are fully repealed as of October 1, 2025.

Repealing the business rent tax will cost the state close to $1 billion in sales tax revenue, according to the Institute on Taxation and Economic Policy. It should also reduce occupancy costs for commercial tenants. While property owners are liable for the commercial lease tax, landlords usually pass it on to tenants.

Exceptions

Florida sales tax will still apply to equipment rentals; fees to park, dock, or store motor vehicles, boats, and aircraft; and short-term residential rentals of six months or less.

The repeal of the commercial lease tax puts Florida in step with how other states tax business rents. However, Avalara VP of Government Relations Scott Peterson notes that Florida is likely still an outlier when it comes to taxing rent for longer than 30 days. “Most states stop taxing hotel and other accommodations after 30 days because at that point the person is renting long-term lodging,” he observes.

The Florida commercial rent tax repeal will affect both landlords and tenants once it takes effect on October 1, 2025. Reviewing rental agreements and legal requirements can help landlords and tenants alike ensure compliance with tax changes. For example, it’s worth knowing the sales tax exemption doesn’t apply to delayed rent or license fee payments for rental periods through September 2025.

Avalara can help businesses comply with tax changes for Florida landlords and tenants. Check out avalara.com if you’d like to know more.

Is Florida eliminating sales tax on commercial rent?
Yes. Effective October 1, 2025, Florida House Bill 7031 repeals Florida’s 2% state sales tax and local discretionary taxes on commercial lease payments. Rent or license fee payments for rental periods through September 2025 are taxable even if payment is made after October 1.

When is Florida repealing commercial rent sales tax?

Florida’s commercial rent sales tax is repealed effective October 1, 2025.

Why did Florida repeal the tax on commercial leases?
The repeal aligns with a multiyear phaseout that began in 2017. No other state applies sales tax to commercial leases.

Does Florida still tax commercial rent?

Florida’s tax on commercial rents remains in effect through September 30, 2025. But payments made before October 1, 2025, for rental periods on or after that date are not subject to tax.