Starting October 1, 2025, Florida will fully repeal the sales tax on commercial real estate leases. This includes both the 2% state tax and any discretionary local surtaxes. The change, enacted through House Bill 7031 and signed into law on June 30, 2025, makes Florida the only state to completely eliminate a sales tax on commercial rent.
Benefits for Businesses
For tenants leasing office, retail, or industrial space, this repeal offers direct savings. Until now, businesses were often paying a combined 3–3.5% in state and local sales tax on rent. For example, a tenant paying $10,000 per month in rent could save $2,400 to $3,600 annually depending on location.
This reduction in operating costs is expected to particularly benefit startups, small businesses, and service-based companies that rely on leased space to operate.
State and Local Revenue Impact
The fiscal impact is significant. According to the Florida Senate’s official fiscal analysis, the repeal is expected to result in:
- $4.48 billion in lost state general revenue for Fiscal Year 2025–26
- $494.8 million in lost local surtax revenue for the same period
These numbers are detailed in the Senate’s Appropriations Committee analysis of HB 7031 (source).
Other sources, such as Florida Realtors and business advocacy groups, have projected the annual relief to tenants at over $2.5 billion.
Local Government Challenges
While this is a clear win for the business community, municipalities across Florida will be forced to contend with the loss of nearly half a billion dollars annually in local revenue. This funding has historically supported infrastructure, transportation, economic development programs, and general municipal services.
Since the repeal includes surtaxes, local governments will not be able to reimpose these taxes independently. Unless the state provides compensatory funding, municipalities may need to consider budget cuts or explore new revenue sources.
What Landlords and Tenants Should Do
With the repeal date approaching, both landlords and tenants should take action to ensure compliance and avoid unnecessary tax collection:
- Update lease agreements and invoicing systems to reflect the tax repeal for occupancy starting October 1, 2025
- Clarify treatment of prepaid rent: If rent is paid before Oct 1 for a period after Oct 1, it is not taxable. However, rent paid after Oct 1 for periods before Oct 1 remains taxable
- File final sales tax returns properly and maintain compliance with Florida Department of Revenue regulations (unconfirmed: We are hearing you will need to file even with ZERO dollar returns for 3 years after Oct 1 to be able to receive a Certificate of Sales Tax Compliance in the event of a sale of the property)
- Landlords selling property should obtain compliance certificates to avoid successor liability for pre-repeal tax periods
Final Thoughts
This repeal marks a major shift in Florida’s tax landscape and will provide welcome relief to commercial tenants across the state. However, the loss of nearly $5 billion in combined revenue raises serious questions about how state and local governments will fill the gap.
As this change approaches, commercial landlords, tenants, and real estate professionals should prepare their documents and processes accordingly—and monitor any new policy developments at the state level.
Frequently Asked Questions
Q: When will Florida eliminate the sales tax on commercial rent?
A: Florida will fully repeal the sales tax on commercial leases starting October 1, 2025. This includes both the state and local surtaxes.
Q: How much can businesses save from the repeal of commercial rent tax in Florida?
A: Businesses could save between $2,400 and $3,600 annually on a $10,000 monthly lease, depending on local surtaxes previously applied.
Q: What should landlords and tenants do to prepare for the Florida commercial rent tax repeal?
A: They should update lease agreements, invoicing systems, and file final tax returns correctly to remain compliant with the Florida Department of Revenue.
Need Help Navigating the Change?
If you have any questions or need assistance preparing for the sales tax repeal, our property management department is well versed in the complexities of Florida’s commercial lease sales tax. We’re happy to help you update your leases, billing systems, and compliance procedures ahead of the October 1, 2025 deadline.You can find the complete legislative analysis in the Florida Senate’s official report on House Bill 7031.
