On June 30, 2025, Florida Gov. Ron DeSantis signed House Bill 7031, enacting the fiscal year 2026 budget and eliminating the commercial rent tax, providing for new sales tax exemptions and holidays and updating the state’s conformity to the Internal Revenue Code, among other tax changes. A summary of those changes is described in this article.
Effective Oct. 1, 2025, House Bill 7031 eliminates the sales tax imposed on certain real property, commonly referred to in the state as the ‘business rent tax.’ Florida was the only state to impose a sales tax on commercial real estate rentals.
Since its inception in 1949, Florida has imposed sales tax on various real property rentals. Prior to 1968, taxable rentals included accommodations for a period of less than six months. The Florida Legislature subsequently expanded the sales tax base to include rentals of commercial offices, parking, dock and storage space for vehicles and boats, when the legislature increased the general sales tax rate. The base expansion measure was imposed at the same sales tax rates as tangible property until 2017, when the Legislature reduced the rate on commercial rents from 6% to 5.8%. This relatively recent decoupling of the business rent tax rate continued with rate reductions to 5.7% in 2019, 5.5% in 2020, 4.5% on Dec. 1, 2023 and 2% on June 1, 2024.
The legislation also adopts several new permanent exemptions for various property, many of which may have been included in previous disaster preparedness sales tax holidays, including exemptions for batteries, fire extinguishers and smoke detectors, portable generators, tarps, anchor systems, fuel cans, bicycle helmets, sunscreen, insect repellant and life jackets.
Following a recent trend among the states, Florida will exempt sales of gold, silver and platinum bullion from sales tax. Currently, sales of those metals are exempt if the sales price exceeds $500. Earlier this year, Gov. DeSantis approved House Bill 999, exempting gold or silver coins recognized as legal tender from the sales tax. Kentucky, New Jersey and Wisconsin enacted legislation exempting certain precious metals from the sales tax in 2024.
The new law also creates a permanent back-to-school sales tax holiday for the entire month of August and schedules a hunting, fishing and camping sales tax holiday from Sept. 8, 2025, through Dec. 31, 2025.
House Bill 7031 makes several other changes to Florida tax law, including:
House Bill 7031 overwhelmingly passed in the state House and Senate, although the legislation fell short of the governor’s property tax reduction efforts. The governor also used his line-item veto on several provisions to eliminate over a half-billion in spending from the fiscal year budget.
The repeal of the business rent tax could present a significant benefit to businesses in the state and is likely to reduce both tenancy costs and the administrative burden of tracking and remitting payments on commercial property. The business rent tax has often plagued out-of-state businesses unaware that Florida remained the last state to impose sales tax on commercial rents. The tax also was known to inhibit even the most basic business planning for related entities with intercompany leases by imposing an additional cost on maintaining real property holding companies.
Taxpayers should reevaluate any existing agreements with commercial rent taxes and reach out to their Florida state and local tax advisers with questions about this year’s budget bill.
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