TIP 25A01-04: Florida Business Rent Tax Repeal, Refunds, and Account Closures

Florida’s commercial rent sales tax repeal took full effect on October 1, 2025. No state sales tax and no county discretionary sales surtax applies to rent or license fees for occupancy periods beginning on or after that date, under House Bill 7031 (Chapter 2025-208, Laws of Florida), which zeroed out the rate in Section 212.031, Florida Statutes.¹ What determines whether you still owe anything is the occupancy period, not the date the check clears.

What the Repeal Actually Eliminates

Both pieces of the old tax are gone. The 2% state rate that applied to commercial leases through September 2025 no longer applies, and the county discretionary sales surtax that stacked on top of it is eliminated for the same transactions. Counties had been authorized under Sections 212.054 and 212.055 to add surtaxes on commercial rent;² for occupancy on or after October 1, 2025, the combined obligation is zero. County surtaxes still apply to other taxable transactions, just not to commercial rent.

This is a full repeal, not a rate cut. Florida had been the only state in the country that taxed commercial real estate rentals, and that distinction is over.

Occupancy Period Controls, Not Payment Date

The most common mistake in the transition is assuming that paying after October 1, 2025 avoids the tax. It doesn’t. Sales tax and any applicable county surtax still apply to rent for occupancy periods through September 2025, even when the payment arrives on or after October 1, 2025.¹

A tenant who pays August 2025 rent in October 2025 still owes the 2% state tax plus any county surtax for that month. The Department of Revenue has stated plainly that timing the payment around the October 1 date does not change the tax obligation.

Prepayments

Prepayments cut the other way. If a tenant paid October 2025 rent in September 2025, no sales tax is due on that payment, because the occupancy itself falls on or after October 1, 2025.¹

Late Payments

Late payments carry the old tax forward. September 2025 rent paid in November 2025 still owes tax for that September occupancy. Landlords should note the occupancy period on each invoice so both sides can identify the correct treatment.

Getting Back Tax Collected on Post-Repeal Occupancy

Some landlords collected tax in advance for occupancy periods that now fall under the repeal. A tenant who prepaid rent and sales tax in June 2025 for October through December 2025 paid tax that is no longer owed. The refund path runs through the landlord, not the tenant.

The landlord first refunds the overcollected tax directly to the tenant. The landlord then files an Application for Refund (Form DR-26S) with the Department of Revenue, including documentation showing the tax was returned.¹ Tenants cannot apply to the Department directly. If your landlord collected tax on rent for an occupancy period on or after October 1, 2025, raise it with them; they have the obligation to make you whole before seeking reimbursement from the state.

What Landlords Should Do With Their Sales Tax Accounts

Landlords whose sales tax accounts existed solely to report commercial rent must keep filing returns for all reporting periods through September 2025. After the final returns are received, the Department will automatically update the account status based on the law change. No separate closure request is needed.¹

No estimated tax payment is required for October 2025 or later on commercial-rent-only accounts. One catch: if you receive a rent payment after the account goes inactive, and that payment covers an occupancy period before October 1, 2025, the tax still has to be reported and remitted. Landlords who also collect sales tax on other transactions, such as sales of tangible goods, continue filing on those accounts as usual.

Pre-Repeal Liability, Penalties, and Records

The repeal is not amnesty. Tax collected but not remitted on pre-October 2025 rent, and tax that should have been collected but wasn’t, remain enforceable.

Under Section 212.12, Florida Statutes, the penalty for failing to timely file or pay is 10% of the unpaid amount, with a minimum of $50. Late filing combined with underreporting adds another 10% for each 30-day period the failure continues, capped at 50% of the unpaid tax. Interest runs at 1% per month on the delinquent amount, calculated from the 21st day of the month following the month the tax was due.³ When tax goes delinquent, the Department can issue a warrant for the full amount owed plus interest, penalties, and collection costs; recorded with the clerk of the circuit court, that warrant becomes a lien on the taxpayer’s property.⁴

Keep your records. Landlords must retain books and records related to commercial rent tax for at least three years under Section 95.091(3), Florida Statutes, and the Department can audit prior periods within that window.¹ Hold invoices, returns, and supporting documentation at least three years past the last taxable period.

Rentals That Are Still Taxable

Several categories that look similar to commercial rent are taxed under Section 212.03, a different statute that was not repealed. These remain fully taxable:

Transient rentals of living, sleeping, or housekeeping accommodations for six months or less, such as hotels and short-term vacation rentals
Parking or storage space for motor vehicles in parking lots or garages
Docking or storage space for boats in boat docks or marinas
Tie-down or storage space for aircraft at airports

Operators of parking garages, marinas, and similar facilities continue to collect and remit sales tax on those transactions.¹

Scholarship Tax Credits Earned Under the Old Rules

Commercial tenants could previously earn credits through the Florida Tax Credit Scholarship Program by contributing to eligible scholarship funding organizations, and apply those credits against sales tax owed on rent. No new credit allocations tied to commercial rentals are issued on or after July 1, 2025. Credits earned from contributions made before that date can still be used against sales tax due on rent for occupancy periods through September 2025.¹ After the final pre-repeal returns are filed, those credits have no further application.

1
Florida Department of Revenue. Tax Information Publication TIP No. 25A01-04 – Sales Tax on Commercial Rentals Repealed Effective October 1, 2025
2
Online Sunshine. Florida Code 212.054 – Discretionary Sales Surtax; Limitations, Administration, and Collection
3
Florida Senate. Florida Code 212.12 – Taxes Declared State Funds; Penalties for Failure to Remit Taxes; Due and Delinquent Dates; Judicial Review
4
Florida Senate. Florida Code 212.15 – Taxes Declared State Funds; Penalties for Failure to Remit Taxes; Due and Delinquent Dates; Judicial Review