Florida is making a major change to its tax code: starting October 1, 2025, businesses will no longer pay sales tax on commercial rent. This long-anticipated repeal affects office spaces, retail locations, warehouses, and other leased commercial properties across the state.
Florida has been the only U.S. state to impose a sales tax on commercial leases. The repeal will not only reduce operating costs for businesses but also simplify bookkeeping, budgeting, and tax compliance for both landlords and tenants.
What Types of Leases Are Included?
The repeal applies to the lease or license of most commercial real estate used for business purposes, including:
- Office space
- Retail storefronts
- Industrial and manufacturing facilities
- Commercial units in strip malls or shopping centers
Both new and existing leases are eligible for the exemption, as long as the rental period begins on or after October 1, 2025.
What Rentals Are Still Taxable?
Not all leases are included in the repeal. The following will remain subject to Florida sales tax:
- Self-storage unit rentals
- Short-term residential rentals (under 6 months)
- Parking lots and garages
- Boat slip rentals
- Aircraft hangars
- Separately rented equipment (e.g., forklifts or generators)
It’s essential for businesses to review their agreements and billing structures to determine what may still fall under taxable status.
Timing Is Critical
Whether a rent payment is taxable depends on the occupancy period, not the payment date. For example:
- If rent covers a period before October 1, 2025, sales tax still applies, even if paid afterward.
- If rent is prepaid for a period on or after October 1, 2025, it should be exempt from sales tax.
Additionally, property tax reimbursements or CAM (common area maintenance) charges tied to pre-repeal occupancy may remain taxable.
Steps to Take Now
Businesses and landlords should take proactive steps to prepare for the change:
- Review lease terms and billing schedules.
- Separate pre- and post-October rent in invoices.
- Adjust internal systems to stop collecting and remitting sales tax on qualifying leases after the repeal date.
- Consult a tax professional to ensure correct handling during the transition period.
Why This Change Matters
This repeal is a significant win for Florida’s business community. The removal of the commercial rent sales tax will ease financial burdens and bring Florida’s tax structure closer in line with other states. For companies considering relocation or expansion, it also enhances Florida’s appeal as a business-friendly environment.
Need Help Preparing for the Change?
At X-Accounting, we help business owners and property managers navigate tax law changes with confidence. Contact us today to review your lease structure and ensure you’re fully prepared for the October 2025 transition.