Florida has made a landmark change for business owners: the repeal of the state’s commercial rental tax, often called the “business rent tax.” Under House Bill 7031 (2025), this tax will be eliminated beginning October 1, 2025.
Florida has been the only state in the nation charging statewide sales tax on commercial rent since 1968. Its elimination represents both financial relief and a long-awaited competitive shift for businesses across the state.
What Was the Commercial Rental Tax?
Since 1968, businesses leasing commercial property in Florida, whether office space, retail storefronts, warehouses, or self-storage units, were required to pay state sales tax on top of rent. In some counties, local discretionary surtaxes also applied.
This meant:
- A company paying $5,000/month in rent could owe an extra $100 each month in state tax (2%), plus local surtax if applicable.
- Over a multi-year lease, those “small” amounts added up significantly.
No other state imposed a similar statewide tax, which made Florida unique, and, many argued, less competitive.
Why Is the Repeal Such a Big Deal?
While 2% may sound minor, the impact scales fast:
- Savings for small tenants: A small office paying $60,000/year in rent would save about $1,200 annually, or $6,000 over a 5-year lease. For lean operations, that money could cover technology, marketing, or payroll support.
- Savings for larger tenants: A company leasing a $240,000/year warehouse saves $4,800 annually, totaling nearly $25,000 over 5 years. Multiply that by multiple locations, and the relief can reach six figures.
- Statewide effect: Collectively, Florida businesses will save hundreds of millions of dollars each year.
Just as important:
- The repeal removes a competitive disadvantage, bringing Florida in line with the rest of the U.S.
- It sends a pro-business signal, encouraging companies to expand or relocate here.
- It frees up capital for reinvestment into operations, hiring, and innovation.
This is why business groups have lobbied for decades to repeal the tax, and why its elimination is being celebrated as a major win.
Could There Be Downsides?
While Florida’s repeal of the commercial rental tax is overwhelmingly framed as a win for businesses, there are a few potential ripple effects worth considering:
- Lost state revenue.
- The commercial rental tax has been generating revenue for the state since 1968. In recent years, even at reduced rates, it brought in hundreds of millions annually.
- With repeal, Florida’s budget will need to absorb that loss, either by reducing spending or shifting the tax burden to other areas. Businesses may see changes in other state or local tax policies over time.
- Uneven benefits.
- Larger corporations with high-dollar leases may see six-figure savings across multiple locations.
- Small businesses leasing a modest office might only save a few thousand dollars a year. While still helpful, the relief won’t feel as dramatic.
- Potential rent adjustments.
- Some landlords may view the repeal as an opportunity to slightly increase base rent, knowing tenants are no longer paying sales tax.
- This isn’t guaranteed, but it’s a negotiation point tenants should watch closely when signing new leases.
- Delayed timing for some tenants.
- The repeal doesn’t take effect until October 1, 2025. Businesses with existing leases will continue paying the tax through that date, which may feel like a slow phase-out for those already locked in.
Bottom line: For most Florida businesses, the savings outweigh these concerns. But understanding the bigger picture ensures companies are prepared for both opportunities and possible trade-offs.
What Should Businesses Do Now?
The repeal doesn’t take effect until October 1, 2025, which gives businesses time to prepare. Steps to consider:
- Review current lease agreements. Check how taxes are handled in your contract and whether adjustments need to be made when the repeal takes effect.
- Update financial forecasts. Factor in reduced occupancy costs for Q4 2025 and beyond when budgeting for 2026.
- Coordinate with landlords and accountants. Ensure rent billing will no longer include tax for occupancy periods beginning October 2025.
- Plan for reinvestment. Think now about where the savings can be redirected, hiring, technology, renovations, or marketing.
- Stay alert to state policy shifts. With this revenue stream gone, monitor whether Florida introduces new taxes or fees that could affect your industry.
Final Word
Florida’s decision to repeal the commercial rental tax is more than a modest tax cut — it’s the end of a unique financial burden that has shaped business costs for more than 50 years. Starting October 2025, businesses across the state will benefit from immediate savings, more competitive positioning, and greater flexibility in how they allocate resources.
The attorneys at The Orlando Law Group help with all types of legal issues for business owners and individuals in Orlando, Waterford Lakes, Altamonte Springs, Winter Garden, Lake Nona, St. Cloud, Kissimmee, and throughout Central Florida.
If you have questions about anything discussed in this article or other legal matters, give our office a call at 407-512-4394or fill out our online contact form to schedule a consultation to discuss your case. We have an office conveniently located at 12301 Lake Underhill Rd, Suite 213, Orlando, FL 32828, as well as offices in Seminole, Osceola, and West Orange counties to assist you.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.
Last Updated on October 2, 2025 by The Orlando Law Group
