Florida has officially eliminated its long-standing sales tax on commercial leases, a move celebrated by businesses and real estate groups across the state. Governor Ron DeSantis signed House Bill 7031, which phases out the Business Rent Tax (BRT) entirely by October 1, 2025, marking a significant victory for economic competitiveness and growth.
A Landmark Tax Cut for Florida Businesses
Governor Ron DeSantis signed House Bill 7031, a comprehensive $1.3 billion tax relief package, on June 30. A key component of this legislation is the complete repeal of Florida’s Business Rent Tax (BRT), a tax on commercial leases that has been in place since 1969. This elimination is projected to save commercial tenants approximately $2.5 billion annually, providing crucial capital for businesses to expand, hire, and invest.
Key Takeaways
- Florida was the only state to impose a statewide sales tax on commercial leases.
- The BRT’s elimination is expected to save businesses $2.5 billion annually.
- The tax cut aims to enhance Florida’s competitiveness in attracting and retaining businesses.
- The repeal includes both the state sales tax rate and any discretionary sales surtax levied by counties.
Historical Context and Phased Reduction
Initially set at 4% in 1968, the BRT increased in tandem with the general sales tax, reaching 6%. Over the years, various payments made by tenants on behalf of property owners, such as mortgage, ad valorem taxes, or insurance, were also subject to this tax. Commercial property subject to the tax included a wide range of assets, from office and retail spaces to parking and docking areas.
The Florida Legislature began a phased reduction of the BRT in 2017:
- 2017: Reduced from 6% to 5.8%
- 2018: Reduced from 5.8% to 5.7%
- 2019: Reduced from 5.7% to 5.5%
- 2021: Set to decrease to 2% (effective summer 2024)
- 2023: Further reduced to 4.5% (ahead of the 2% cut)
- 2025: Eliminated entirely (effective October 1, 2025)
Economic Impact and Industry Reactions
The repeal has been widely praised by organizations such as the Florida Chamber of Commerce, Florida Realtors, and Florida TaxWatch. Proponents argue that the tax created a competitive disadvantage for Florida businesses. Gary Tasman, CEO & Principal Broker for Cushman & Wakefield Commercial Property Southwest Florida, stated that the elimination will make Florida
Sources
- Florida Eliminates Burdensome Business Rent Tax, | Florida Realtors.
- Florida To Eliminate Business Rent Tax, Law360.
- Florida eliminates business rent tax on commercial leases, Gulfshore Business.
- New Florida real estate laws hailed as ‘major victory’ for property owners, MPA Mag.