Florida has taken a significant step to enhance its appeal as a business-friendly state. As of October 1, 2025, the 2% state sales tax on commercial leases will officially be eliminated, marking the end of a policy that has been in place since 1969. This change follows the signing of House Bill 7031 by Governor Ron DeSantis on June 30, 2025.
This long-awaited policy shift represents a meaningful win for commercial real estate owners, investors, and tenants across the state. For decades, Florida stood alone as the only U.S. state imposing a statewide sales tax on commercial lease payments. This burden affected everything from office space and retail units to warehouses and self-storage facilities. With the repeal now finalized, that burden is lifted.
What’s Changing?
Previously, commercial tenants were responsible for a 2% sales tax on lease payments, which landlords collected and remitted to the state. While the rate was reduced incrementally from 6% since 2017, it still presented a cost that impacted leasing decisions and overall operating expenses.
As of October 1, the tax will be fully removed, along with any additional county-level surtaxes that had been authorized at the local level. This means lower effective lease costs for tenants and greater flexibility for landlords to market their properties competitively.
Why It Matters
For commercial real estate professionals, this development unlocks new opportunities:
- Landlords can reposition their properties with a more competitive cost structure, especially in asset classes still recovering from post-pandemic impacts, such as office.
- Investors may see increased leasing velocity and stronger net operating income (NOI) potential, particularly in tight markets where cost advantages are meaningful.
- Tenants benefit from a direct reduction in monthly rent expenses, freeing up capital for growth, hiring, or reinvestment into their operations.
This change strengthens Florida’s value proposition for national and international businesses considering relocation or expansion. It also reinforces the state’s reputation for low-tax, pro-business policies.
Broader Economic Impact
The elimination of the business rent tax is expected to have a ripple effect throughout the economy. According to a study commissioned by Florida Realtors, every $1 in tax relief could generate $6 in economic activity, as businesses reinvest savings into personnel, property improvements, and local communities.
Even with the gradual tax reductions in recent years, the state saw rising revenues from commercial lease taxes—up from $1.86 billion in 2017 to $2.64 billion in 2024—due to population growth and strong economic fundamentals. Now, those dollars stay in the hands of local businesses.
What Qualifies?
The repeal applies to most types of commercial use, including:
- Office, retail, and warehouse leases
- Commercial land use agreements
- Licenses for vending machines, storage units, and docking spaces
- Convention and meeting rooms
Leases of residential property, agricultural land, and rentals to nonprofit or government entities remain exempt as before.
What This Means for You
At Saunders Real Estate, we view this legislative change as a welcome opportunity for both current property owners and prospective investors. The elimination of this tax simplifies the leasing conversation, enhances property appeal, and further solidifies Florida’s long-term trajectory as a top-tier real estate market.
As always, our advisors are here to help clients navigate the evolving landscape—whether you’re reevaluating a leasing strategy, exploring investment opportunities, or working to position a commercial property for sale.
Let’s talk about how this shift can benefit your portfolio.