The Key West sales tax rate is 7.5% on most purchases, combining Florida’s 6% state sales tax with Monroe County’s 1.5% discretionary surtax. If you’re paying for a hotel room or a short-term vacation rental, the effective rate climbs to 12.5% once the county’s 5% tourist development tax is added. A few quirks in how the surtax is calculated, and in what counts as taxable, can change the final number on your receipt.
What Makes Up the 7.5%
Florida applies a 6% state sales tax to most retail sales of tangible personal property, certain services, and admissions.1Florida Legislature. Florida Statutes 212.05 – Sales, Storage, Use Tax Monroe County adds a 1.5% discretionary sales surtax on top of that, which brings every register in Key West to 7.5%.2Florida Department of Revenue. Discretionary Sales Surtax Information for Calendar Year 2026 The county portion is split between an infrastructure surtax and a school capital outlay surtax, both approved by local referendum as Florida law requires.3Florida Legislature. Florida Statutes 212.055 – Discretionary Sales Surtaxes; Legislative Intent; Authorization and Use of Proceeds
The $5,000 Cap on Big-Ticket Items
Monroe County’s 1.5% surtax only applies to the first $5,000 of any single item’s price.4Florida Senate. Florida Statutes 212.054 – Discretionary Sales Surtax; Limitations, Administration, and Collection Anything above that is taxed at just the 6% state rate. The cap matters most for the kinds of purchases that are common in the Keys: boats, vehicles, and heavy equipment.
Take a $25,000 boat as an example. The surtax applies only to the first $5,000, which comes to $75. The 6% state tax applies to the whole $25,000, which is $1,500. Total tax: $1,575, rather than the $1,875 you’d owe if 7.5% ran across the full price.
The cap is per item, not per transaction. Buy two $4,000 items on one receipt and each is evaluated on its own; both sit below the cap, and both get the full 7.5%. One caveat: items normally sold together as a set or in bulk can be treated as a single item for cap purposes.4Florida Senate. Florida Statutes 212.054 – Discretionary Sales Surtax; Limitations, Administration, and Collection A packaged set of custom cabinets, for instance, could be considered one item even if the invoice itemizes the pieces.
Hotels and Vacation Rentals: 12.5%
Short-term lodging in Key West carries an extra 5% tourist development tax on top of the 7.5% sales tax, so the total on a hotel room or vacation rental is 12.5%.5Monroe County Tax Collector. Tourist Development Tax The tax applies to any stay of six months or less and is calculated on the total rental amount.
The authority for the levy comes from Florida Statutes Section 125.0104, which lets counties impose tourist development taxes through a combination of ordinance and referendum.6Florida Legislature. Florida Statutes 125.0104 – Tourist Development Tax Monroe County directs the revenue to tourism promotion, beach and reef maintenance, and environmental restoration.
Property owners and managers are responsible for collecting the tax from guests and remitting it to the Monroe County Tax Collector. Larger booking platforms like Vrbo now collect and remit both the state transient rental tax and the county tourist development tax on Florida reservations, which lifts the paperwork off hosts for bookings made through them. If you list a property independently or use a platform that doesn’t handle tax collection, the obligation is yours.
Restaurants Versus Groceries
Groceries are tax-free in Florida, but prepared food served by a restaurant is taxable at the full 7.5%.7Florida Department of Revenue. Sales and Use Tax on Restaurants and Catering That includes takeout and to-go orders, not just dine-in. Every fish taco, slice of key lime pie, and café con leche at a Key West restaurant gets the 7.5% added.
The dividing line is who prepares the food, not where you eat it. A sandwich made at a deli counter is taxable. A loaf of bread off a grocery shelf is not. Restaurants that also sell packaged groceries from a separate department can skip the tax on those grocery items, but they have to keep separate records for the two operations.7Florida Department of Revenue. Sales and Use Tax on Restaurants and Catering
What’s Not Taxed
Florida exempts several categories of purchases entirely. The ones that come up most in everyday spending:
- Unprepared food meant for human consumption, whether raw, canned, or packaged, as long as it isn’t sold in a restaurant or ready-to-eat format.8Florida Legislature. Florida Statutes 212.08 – Sales, Rental, Use, Consumption, Distribution, and Storage Tax; Specified Exemptions
- Prescription drugs, hypodermic needles, diagnostic test kits, prosthetic devices, hearing aids, and common household remedies approved by the Department of Business and Professional Regulation.8Florida Legislature. Florida Statutes 212.08 – Sales, Rental, Use, Consumption, Distribution, and Storage Tax; Specified Exemptions
- Most professional services, including fees paid to lawyers, accountants, architects, and consultants. Florida taxes a limited list of specific services, but the broad category of professional advisory work is excluded.
Cosmetics and toiletries with medicinal ingredients are not exempt, even when marketed for health purposes. The question is whether a product is generally regarded as food or appears on the state’s approved remedy list.
Online and Out-of-State Purchases
Buy something taxable from an out-of-state seller who doesn’t collect Florida sales tax, then bring it into Monroe County or have it shipped there, and you owe use tax at the same 7.5% combined rate.9Florida Department of Revenue. Florida Sales and Use Tax That covers online purchases, catalog orders, and items bought on out-of-state trips.
Most large online retailers already collect Florida sales tax under the state’s economic nexus rule, which applies to any out-of-state seller with more than $100,000 in gross Florida sales in the previous calendar year.10Florida Department of Revenue. Account Management and Registration Purchases from smaller vendors, private sellers, or non-U.S. retailers often don’t get taxed at checkout. In those cases, you’re responsible for self-reporting and paying the use tax. Few individuals do, but businesses discover during audits that the Department of Revenue treats it as a real obligation.
If You’re Selling in Key West
Any business selling taxable goods or services in Key West has to register as a Florida sales and use tax dealer before opening. Registration is free through the Florida Department of Revenue’s online portal or by filing a paper Form DR-1.10Florida Department of Revenue. Account Management and Registration Once registered, you receive an Annual Resale Certificate that lets you buy inventory for resale without paying tax at the point of purchase.11Florida Department of Revenue. Annual Resale Certificate for Sales Tax It cannot be used for things the business consumes itself, like office supplies or equipment.
Filing frequency depends on how much tax you collect. Most new businesses start on a quarterly schedule; higher-volume businesses are assigned monthly filing. Returns are due on the 1st of the month after the reporting period, and the Department requires electronic filing and payment.
Late filing carries a penalty of 10% of the tax owed, with a $50 minimum that applies even if you owe nothing for the period.9Florida Department of Revenue. Florida Sales and Use Tax Interest accrues on top at a floating rate set by the Department. Failing to file electronically when required adds another $10 per violation. For a seasonal Key West business that forgets to file during the slow months, those minimums stack quickly.