Florida has officially repealed its Business Rent Tax (BRT), a unique and long-criticized levy on commercial leases. With the signing of House Bill 7031 by Governor Ron DeSantis on June 30, 2025, the state will eliminate this tax effective Oct. 1, 2025, in a significant effort to reduce costs for Florida businesses.
What Was the Business Rent Tax?
Since 1969, Florida has been the only state in the United States to impose a sales and use tax on commercial real estate rentals. The tax applied to rent paid for office space, retail stores, warehouses and other commercial properties. Under the BRT, even related payments like a tenant covering the landlord’s property taxes or insurance were considered taxable. At its peak, the tax rate was six percent and in alignment with Florida’s general sales tax. However, the BRT has evolved into a point of contention for business owners and industry groups as an unfair penalty for those leasing commercial property.
Beginning in 2017, the state began to incrementally reduce the BRT: 5.8 percent in 2017; more gradual reductions from 2018 to 2023; and in 2024, the rate dropped to two percent.
What Happens on Oct. 1, 2025?
Beginning Oct. 1, 2025, there will be No more state sales tax on commercial lease payments, and landlords and tenants will no longer have to calculate or remit BRT on any qualifying leases. Common area maintenance (CAM) charges and other lease-related fees billed after Oct. 1, 2025, are also exempt.
If a tenant is late for their September 2025 rent payment, and the payment is made on or after October 1, the two percent tax rate will still apply because the charge was originally due before the repeal date.
What About Local Taxes?
Local Florida governments may still choose to impose a discretionary sales surtax (DSS) on commercial leases despite the end of BRT. HB 7031 allows counties and school boards to reduce or repeal these surtaxes with a two-thirds vote, starting four years after the surtax is levied.
For questions or more information about the impact of HB 7031 on your Florida commercial real estate investments, contact your Windham Brannon advisor, or reach out to Tim Clancy and Micah Greenberger.
