Florida is set to eliminate its long-standing Business Rent Tax (BRT) on October 1, 2025, following Governor Ron DeSantis’s signing of a historic $1.3 billion tax relief bill. This move, a significant win for Florida businesses, aims to boost economic competitiveness by freeing up an estimated $2.5 billion annually for commercial tenants.
A Landmark Tax Relief Bill
Governor Ron DeSantis officially signed House Bill 7031, a comprehensive tax relief package totaling $1.3 billion. A cornerstone of this legislation is the complete repeal of the Business Rent Tax, a tax unique to Florida that has been levied on commercial leases since 1969. This elimination encompasses both the state sales tax rate and any discretionary sales surtax imposed by counties on commercial leases.
Key Takeaways
- Economic Boost: The elimination of the BRT is projected to save commercial tenants in Florida $2.5 billion annually, providing capital for expansion, hiring, equipment purchases, and improved employee benefits and salaries.
- Enhanced Competitiveness: Florida was the only state to impose a tax on commercial leases. Its removal is expected to make the state more attractive for businesses looking to start or expand operations.
- Long-Term Goal Achieved: The full repeal of the BRT has been a long-standing priority for organizations like Florida Realtors®.
Historical Context of the Business Rent Tax
The Business Rent Tax originated in 1969, initially at a rate of 4%. Over the years, as the general sales tax rate increased, so did the BRT, reaching 6% at its peak. This tax applied not only to the base rent but also to other payments made by tenants on behalf of the property owner, such as mortgage, ad valorem taxes, or insurance. The scope of commercial property subject to this tax was broad, including land, buildings, office and retail spaces, convention rooms, and even parking and docking spaces.
Phased Reduction Leading to Full Elimination
The Florida Legislature began a phased reduction of the Business Rent Tax in 2017, gradually lowering the rate over several years:
- 2017: 6% cut to 5.8%
- 2018: 5.8% cut to 5.7%
- 2019: 5.7% cut to 5.5%
- 2021: 5.5% cut to 2% (effective summer 2024)
- 2023: 5.5% cut to 4.5% (providing additional relief ahead of the 2% cut)
- 2025: 2% cut to 0% (effective October 1, 2025)
Broader Tax Relief Measures
Beyond the BRT elimination, House Bill 7031 includes other significant tax relief provisions:
- Permanent removal of sales tax on many disaster and hurricane preparedness supplies.
- Permanent removal of sales tax on several safety and health-related items.
- Creation of a permanent annual Back-to-School Sales Tax Holiday in August.
- Introduction of a new sales tax holiday for hunting and fishing related items.
Sources
- Florida Eliminates Burdensome Business Rent Tax, | Florida Realtors.
- Florida To Eliminate Business Rent Tax, Law360.