Florida’s Business Rent Tax Ends Oct. 1: What Commercial Tenants and Landlords Should Do Now

On June 30, 2025, Florida enacted House Bill 7031, permanently eliminating the state’s business rent tax—long a unique cost for Florida businesses. We first flagged this change in our summer update: Florida Ends Business Rent Tax and Expands Sales Tax Exemptions.

With the repeal taking effect October 1, 2025, here’s what tenants, landlords, and bookkeepers need to know—and do—right now.

What Changes on October 1, 2025?

Beginning with rental or license periods that start on or after 10/1/25, no Florida state sales tax or local discretionary surtax applies to commercial rent. This covers typical commercial space—offices, retail, warehouses, self-storage, and many licenses to use real property. Florida reduced the tax rate to 2% on June 1, 2024; HB 7031 removes it entirely going forward.

Timing is Everything: Period of Occupancy vs. Payment Date

This is where most mistakes happen. Florida’s rule focuses on when the tenant occupies the space (the rental period), not when money changes hands.

• Not taxable: October 2025 rent (and later months), even if paid in September as a prepayment.
• Still taxable: Rent for August or September 2025, even if paid in October (or later). Paying after 10/1 doesn’t convert a taxable September period into a nontaxable one.

If you already billed or collected tax on true prepayments for October–December 2025, you’ll need to correct it (see “Refunds & Returns” below).

What’s Not Changing (Tax Still Applies to These)

The repeal is narrow. It does not make the following charges tax-free:

• Transient/short-term lodging (six months or less) such as hotels and short-term rentals
• Motor-vehicle parking and storage
• Boat dockage/storage and aircraft tie-down/storage

Those remain taxable under separate provisions. Make sure your team doesn’t remove tax from those charges by mistake.

Does the Repeal Include Local Discretionary Surtax?

Yes. Where the business rent tax previously triggered both the state tax and any local discretionary surtax, the repeal removes both for rental periods on or after 10/1/25. Practically, your October invoices should not include a tax line for either the state rate or local surtax—provided the charge is for commercial rent and the rental period begins October 1 or later.

Invoicing & Lease Language: What to Change and What to Keep

• Remove the tax line for October 2025 rent and later on tenant invoices.
• Retain tax lines for any period through September 2025, even if the tenant pays after October 1.
• Review lease clauses that reference the business rent tax. Many leases require tenants to pay “applicable taxes” on rent; update templates and addenda to remove references to Florida’s commercial rent tax effective 10/1/25.

Accounting Systems & Workflows to Update

• General ledger & billing: Update items, tax codes, and automated rules so that commercial rent is non-taxable beginning with October 2025 periods.
• AR/AP cutovers: Use a period-based control (e.g., service date or occupancy date) to drive taxability rather than relying on invoice or payment dates.
• Reporting & audit trail: Document the cutover logic and save copies of pre- and post-change invoices in case of future review.

Refunds & Returns: How to Unwind Tax Collected via Prepayments

If you collected and remitted sales tax on true prepayments for post-10/1/25 periods (e.g., October rent paid in September), the typical sequence is:

1. Refund the tax to the tenant (maintain documentation showing the rental period and the refund).
2. Request a refund from the state using Form DR-26S (Sales and Use Tax Refund Application), attaching evidence that the tax was returned to the tenant and that the underlying period is nontaxable under the repeal.

Coordinate the timing with your monthly/quarterly sales tax filings so your returns, records, and bank activity line up cleanly.

Sales Tax Accounts & Filing Status with DOR

• If your Florida sales tax account was used only for commercial rent, you still need to file through the last taxable period (September 2025).
• After your final return, that includes September activity, is processed, the Department of Revenue generally updates account expectations automatically.
• If you later receive late payments for pre-October 2025 periods, those amounts remain taxable and must be reported and remitted—even though the repeal is in effect for current periods.

Communication Plan: Keep Everyone Informed

• Landlords: Send a brief notice confirming that October 2025 rent and forward will no longer include sales tax or discretionary surtax and restate the timing rule for any outstanding September balances.
• Tenants: Ask your landlord to confirm the removal of the tax line beginning in October and reconcile any credits/refunds due for prepayments that were mistakenly taxed.
• Internal teams: Train AP/AR staff on the period-of-occupancy rule to avoid miscoding late payments or prepayments, and update SOPs to reflect the new treatment.

Why this Repeal Matters

Florida was the only state that broadly taxed commercial rent. Eliminating the business rent tax reduces operating costs and administrative work for thousands of tenants and landlords. While the rate had already been cut to 2% as of June 1, 2024, removing it completely simplifies compliance and makes Florida’s treatment of commercial leases more competitive nationally.

Need Help Implementing the Change?

With the effective date now upon us, it’s time to finish your cutover, document your methodology, and clean up any prepayment tax that shouldn’t have been collected.

Florida’s tax rules are detail-driven—especially around timing, refunds, and local surtax treatment. Rivero, Gordimer & Company, P.A. has served the tax and accounting needs of Tampa Bay businesses for over 40 years. We can review your lease language, billing systems, and filings to ensure a clean handoff on October 1. Contact us to discuss your situation.