Florida Ends Sales Tax on Commercial Rentals

On June 30, 2025, the US State of Florida enacted House Senate Bill 7031, which repeals the application of sales and use tax on commercial real estate rentals, extends the application deadline for the data center property exemption by 10 years, creates an exemption for aviation fuel, creates permanent and seasonal sales tax holidays, and provides sales tax relief on exports.

Impact on Taxable Persons

After Florida enacted several rate reductions for the sales tax on commercial rentals, the latest House Senate Bill repeals the application of the reduced sales tax rate. Therefore, effective October 1, 2025, the so-called business rent tax set at 2% will no longer be applicable. The decision to abolish taxes on commercial rentals will be beneficial both for landlords and tenants in Florida.  

Businesses that are registered to collect sales tax on commercial rentals may deactivate or cancel their accounts by notifying the Department of Revenue. As part of the process, these businesses will be required to file a final tax return and pay any due taxes within 15 days of the inactivation or closing date.

In addition to no longer being liable for 2% sales tax, these businesses will also no longer be responsible for collecting and remitting any local sales and use tax imposed on total rent charged for renting, leasing, letting, or granting a license to use commercial real estate.

Regarding the deadline extension for the data center property exemption, Florida's exemption certificates are extended by 10 years from June 30, 2027, to June 30, 2037. Additionally, the qualifying requirements for a data center property exemption are also amended by legislation. 

Under new rules, the data center must have a critical IT load of 100 megawatts or higher, in addition to the current requirement of 1 megawatt or higher dedicated to each owner or tenant within the data center, and a cumulative capital investment of USD 150 million or more. However, whether the new exemption threshold applies to existing data centers that had previously used and received approval for the exemption is unclear at this moment.

Conclusion

Florida was the only US state to impose a sales tax on commercial real estate rentals. Therefore, by repealing these provisions, Florida provided a new sales tax exemption. Following this decision, it is expected that both tenancy costs and the administrative burden of tracking and remitting payments for commercial properties will be significantly reduced. 

On the other side, data center operators that benefited from the tax exemption must now determine whether new rules apply to them or not. If they do, they may no longer be eligible for the exemption, which will have a significant financial and compliance impact.

Source: Florida Department of Revenue, House Senate Bill 7031