Governor Ron DeSantis signs historic legislation to repeal state and local sales taxes on commercial real estate leases starting October 1, 2025

Fort Lauderdale, Florida- On July 3, 2025, Florida Governor Ron DeSantis signed a landmark piece of legislation that will provide significant relief to commercial real estate tenants across the state. The new law, HB 7031, eliminates the state’s 2% sales tax on commercial property leases, along with local surtaxes, effective October 1, 2025. This repeal marks a substantial shift in Florida’s tax policy regarding commercial leases, bringing both financial savings and administrative simplicity to landlords, tenants, and property managers.

For years, Florida’s commercial property tax rates had been steadily decreasing. The state’s sales tax on commercial leases, initially aligned with the general sales tax rate of 6%, was reduced over time to its current 2%. However, this tax, combined with varying local surtaxes, meant that tenants in some areas were facing tax rates ranging from 3% to 3.5% on their commercial leases. With the signing of HB 7031, these taxes will be completely eliminated, eliminating the need for both tenants and property owners to navigate the complexities of the tax code.

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Governor DeSantis expressed optimism about the change, noting that it would help stimulate Florida’s economy. “This legislation is a win for businesses, particularly small businesses, that have been burdened by high tax rates on their commercial leases,” said DeSantis in a statement. “By eliminating these taxes, we’re ensuring that businesses can thrive and grow in Florida without unnecessary obstacles.”

The move comes as part of a broader initiative by the Governor’s office to create a more business-friendly environment in the state, aiming to attract more companies and foster a more robust economic landscape. By reducing the tax burden on commercial leases, Florida hopes to make itself even more attractive to both local entrepreneurs and out-of-state companies looking to expand their operations in the state.

One of the key benefits of HB 7031 is the simplification it offers to landlords and property managers. With the repeal of both the state and local taxes on commercial real estate leases, they will no longer need to calculate and bill tenants for these taxes, nor will they have to comply with various local surtax regulations. This not only reduces the administrative burden but also improves the clarity and transparency of billing for tenants.

However, while this repeal applies to most commercial leases, certain exceptions remain. The new law does not apply to short-term residential rentals or rentals related to vehicle parking, boat docking, and aircraft hangar rentals. Additionally, equipment rentals that are included in a lease will still be subject to the sales tax.

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This shift in policy represents a major victory for the commercial real estate sector in Florida, offering both immediate and long-term benefits. With a deadline of October 1, 2025, landlords, property managers, and tenants have a few months to prepare for the tax changes. The law’s passage is expected to positively impact the state’s economy by lowering operating costs for businesses, enhancing Florida’s reputation as a hub for commercial growth, and ultimately attracting even more investment to the region.

For more details on the new law or how it might affect specific commercial property leases, the legal team at Tripp Scott’s commercial real estate division is available for consultations via their website or by phone at 954-525-7500.

In conclusion, the repeal of the sales tax on commercial leases is a decisive move by the state to make Florida more attractive to business owners, landlords, and tenants alike. With the law set to take effect in October 2025, the changes are expected to bring about both economic and administrative improvements, fostering a more dynamic business environment throughout the state.