With Florida Gov. Ron DeSantis’ signature, Florida House Bill (HB) 7031 ending both the State Business Rent Tax and County Surtax on commercial leases became law. This change, which becomes effective Oct. 1, 2025, eliminates the last statewide tax on commercial leases in the United States and marks the culmination of many years of effort by BOMA Florida, a coalition of BOMA local associations throughout Florida that represent more than 1,000 members in office space and commercial buildings.
About the Rent Tax
The statewide tax has been in place since 1968 and has been as high as 6%. It decreased over the years to as low as 2% and applied not only to base rent, but to additional rent charges passed through to tenants, such as common area maintenance, utilities, insurance, real estate taxes, and property management fees, according to law firm Holland & Knight. The tax is typically passed on to tenants, which increases the overall cost of occupancy. The County Surtax, which was also eliminated by this bill, typically ranges from 0.5% to 1.5%, depending on the county. BOMA Florida estimates that the final repeal of the tax will save tenants a projected $904.8 million over the next fiscal year.
“Florida is the only state in the U.S. that still imposes a statewide sales tax on business rent, and its elimination is a huge step forward for Florida and the country,” said Luci Smith, Chair and Chief Elected Officer of the Building Owners and Managers Association (BOMA) International, and Director of Property Management at Link Logistics. “As a proud Floridian myself, I’ve seen the incredible effort that’s taken place over many years to bring down this tax, and I’m so proud of both BOMA Florida and the state government for finally getting this done.”
Implications for Tenants and Landlords
The bill doesn’t affect the sales tax on rental income from motor vehicle, boat, or aircraft storage or short-term residential rentals with a term of less than six months, so both landlords and tenants should evaluate lease structures and the nature of the premises to determine whether the rent on their property will still be taxed, Holland & Knight recommends.
In addition, tenants should also review their 2025 annual reconciliation of additional rent and make sure they’re not paying sales tax on rent charges that are incurred on or after Oct. 1, 2025, even if they paid those amounts before Oct. 1, the firm said. Tenants should also touch base with their landlords and confirm that reconciliations for the 2025 calendar year will reflect the tax reduction. The firm also recommends that any tenant who has set up automatic rent payments should review their payment system to make sure the sales tax is removed starting in October.
Landlords should make sure their accounting and invoice systems collect sales tax for rent charges incurred through Sept. 30 and stop collecting on or after Oct. 1. Holland & Knight also suggests that landlords notify tenants of the tax repeal and explain how it will affect monthly payments.
