Florida businesses pay a 2% sales tax on their rent or lease for commercial spaces, whether in a downtown office building or a suburban strip mall. But not after Oct. 1.

Gov. Ron DeSantis signed House Bill 7031 on June 30, officially ending Florida’s business rent tax. In place since 1969, the tax gradually dwindled from 6% to 2% after 2017. Florida is the only state that charges a statewide sales tax on commercial leases, though some cities across the U.S. have similar local taxes.

Gary Tasman

It is a major win for the Florida Chamber of Commerce, Florida Realtors, Florida TaxWatch and other groups that have long argued that a tax on commercial leases clouds the state’s otherwise sunny reputation for business-friendly tax policies and burdens companies with an expense that hinders growth.

“Florida has always had a competitive disadvantage by charging sales tax on business rents,” said Gary Tasman, CEO & principal broker for commercial real estate firm Cushman & Wakefield Commercial Property Southwest Florida. “In our professional opinion, the elimination of that tax is going to make us much, much more competitive when recruiting new businesses and starting new businesses in Florida.”

While landlords collect the business rent tax along with the rent, the 2% burden is borne by tenants.

“They just got an effective decrease in their monthly rent,” said Stan Stouder, CCIM, founding partner of CRE Consultants, which manages commercial space across the region. “This is particularly helpful in certain sectors. For example, the office sector since the [COVID-19] pandemic (in 2020) has languished. So, when you’re trying to fill an office space that’s been empty and you can pass on even a (2% savings), it makes the space much more competitive… Kudos to the Legislature for having the foresight and the temerity to make this change.”

The new rule also eliminates any sales surtax that some counties levy on commercial leases at their discretion, wrote Florida Realtors Public Policy Communications Director Tom Butler.

Mark Wilson, president & CEO of the Florida Chamber of Commerce, in a statement, called the decision “a major win for Florida’s competitiveness and local businesses, who will reinvest those dollars into their employees, growth and communities.”

Stan Stouder

For years, Florida’s business rent tax aligned with the state’s general 6% sales tax rate. But starting in 2017, the Legislature reduced the rate incrementally each year or so. In 2021, it set the tax to decrease to 2% when the state’s Unemployment Compensation Trust Fund reached pre-pandemic levels. That happened in March 2024, locking in the 2% rate, which has been in effect since June 2024.

Even with the reduction in rate, the revenue generated by the tax has continued to climb from $1.86 billion in 2017 to $2.64 billion in fiscal year 2024, a March report from the University of Florida Kelley A. Bergstrom Real Estate Center’s Due Diligence publication found. The report attributed the increase to a strong economy and increasing population.

A study commissioned by Florida Realtors said eliminating the tax would spur $6 in economic activity for every dollar invested in eliminating the business rent tax.

The business rent tax includes “any person who rents, leases or grants a license to others to use commercial real property,” according to the Department of Revenue. That means leases on land, buildings, office and retail space, convention and meeting rooms, warehouses, self-storage units, airports tie-downs, parking and docking spaces, licenses granting the use of property for the placement of vending, amusement or newspaper machines and payments the tenant makes on behalf of a property owner, such as mortgage, ad valorem taxes or insurance.

Dwelling units, agricultural property, rentals to nonprofits and rentals to federal, state, county and city government agencies are exempt.