Florida Eliminates State Sales Tax on Commercial Rent

On June 30, 2025, Gov. Ron DeSantis signed HB 7031 into law, marking a significant shift in Florida’s approach to taxing commercial leases. Effective Oct. 1, 2025, Florida will no longer impose state sales tax on rental payments and license fees for commercial real estate, such as office space, warehouses, storage units, and retail properties. This repeal of Section 212.031, Florida Statutes, represents the culmination of a multi-year legislative effort to phase out the commercial rent sales tax.

Gradual Phase-Out of the Tax

Florida’s move to eliminate this tax follows a series of reductions over recent years. Most notably, in June 2024, the tax rate was lowered from 4.5% to 2%. The complete repeal now puts Florida in line with the trend toward minimizing the tax burden on businesses. In addition to eliminating the state-level tax, the change will nullify local discretionary surtaxes on commercial leases, which were assessed by various counties across the state.

Action Required by Landlords

Property owners and managers should begin preparing now to adjust invoicing practices. Any rental payments or license fees tied to periods of occupancy beginning Oct. 1, 2025, should no longer include Florida sales tax. Tenants, including related parties, should be proactively informed of this change to ensure proper understanding and compliance.

Transitional Considerations and Compliance Related to Periods of Occupancy

Despite the repeal, landlords must take care to distinguish between taxable and non-taxable rent periods. Rental payments that cover occupancy prior to Oct. 1, 2025 — whether paid late or recalculated retroactively — remain subject to the sales tax. For example, if September rent is paid in October, it is still taxable under the old rules.

Other Taxable Rentals Remain in Effect

It is also important to note that the repeal applies specifically to commercial property leases under Section 212.031. Other types of rentals — such as short-term residential stays, hotel accommodations, parking facilities, boat docks, and aircraft hangars — remain subject to sales tax. Similarly, rentals of tangible personal property are still taxable.

KSM closely follows legislative activity across the country. Thus, if you have questions about how this sales tax elimination might impact your business, please contact your KSM advisor or fill out the form below.