Florida’s HB 7031: A Game-Changer for Commercial Leases Starting October 2025

Update (October 2026): The repeal described below took effect on October 1, 2025. Landlords should still report tax on rent for periods through September 2025, even if it is paid late (Florida DOR TIP 25A01-04).

On October 1, 2025, Florida’s commercial real estate market changed with the implementation of House Bill (HB) 7031. Signed into law by Governor Ron DeSantis, this legislation eliminates the State Business Rent Tax and County Surtax on commercial leases, positioning Florida as a more attractive hub for businesses.

What is HB 7031?

HB 7031 repeals Section 212.031 of the Florida Statutes, which has imposed a sales tax on commercial lease payments since 1969. Previously, Florida was the only state to levy such a tax. The rate was 2%, with additional County Surtaxes ranging from 0.5% to 1.5%. The repeal eliminates these taxes, reducing costs for tenants leasing office, retail, or industrial spaces. However, taxes on motor vehicles, boats, aircraft storage, or short-term residential rentals (under six months) under Section 212.03 remain unaffected.

Economic Benefits for Florida

The elimination of the commercial rent tax is expected to significantly boost Florida’s economy. Lower occupancy costs make the state more competitive, attracting new businesses and encouraging existing ones to expand their operations. Small businesses, often burdened by tight margins, will benefit the most, as reduced rent expenses free up capital for hiring, inventory, or marketing. For example, a small retail shop in Miami-Dade County paying $5,000 monthly rent could save $175-$275 per month (2% state tax plus 0.5%-1.5% county surtax), equating to $2,100-$3,300 annually. This extra cash flow can fuel growth and job creation.

The repeal also enhances Florida’s appeal for startups and entrepreneurs. With lower operational costs, businesses can allocate resources to innovation, technology, or customer experience, fostering a vibrant economic ecosystem. Cities like Miami, Orlando, and Tampa could see increased commercial leasing activity, driving demand for retail and office spaces.

Practical Example: How HB 7031 Impacts a Business

Consider a mid-sized tech firm leasing a 10,000-square-foot office in Broward County. Their monthly rent, including common area maintenance and property taxes, totals $25,000. Under the old tax structure, they paid an additional 2% state tax ($500) and a 1% county surtax ($250), totaling $750 monthly or $9,000 annually. Since October 1, 2025, this firm saves the entire $9,000 annually, which could fund new equipment, additional staff, or marketing campaigns. This cost reduction enhances their competitiveness and financial stability.

Action Steps for Businesses

For Tenants

• Review 2025 Reconciliations: Ensure landlords do not charge sales tax on rent for periods after September 30, 2025. Verify that annual reconciliations prorate taxes correctly for the first three quarters of 2025.

• Update Payment Systems: If you use automatic rent payments, confirm the tax component was removed for October 2025 and later.

• Communicate with Landlords: Confirm that your landlord has stopped charging sales tax on rent for October 2025 and later.

For Landlords

• Cease Tax Collection: Stop collecting sales tax on commercial rent for periods after September 30, 2025. Taxes for earlier periods remain due.

• Update Systems: Modify accounting and invoicing systems to reflect the tax repeal. Ensure 2025 reconciliations prorate taxes for the first nine months.

• Notify Tenants: Inform tenants of the change and its impact on their payments. Clarify if any lease components (e.g., vehicle storage) remain taxable.

• Evaluate Lease Portfolio: Identify leases that may still be subject to tax, such as those for short-term rentals or storage, and adjust practices accordingly.

Why This Matters for Small Businesses

Small businesses, from cafes to boutique consultancies, often operate on thin budgets. The tax repeal directly reduces their overhead, allowing them to reinvest savings into growth initiatives. For instance, a family-owned restaurant could use the savings to upgrade equipment or expand its menu, while a startup could hire additional staff to scale operations. This financial relief also levels the playing field, enabling smaller enterprises to compete with larger corporations in Florida’s dynamic market.

Looking Ahead

HB 7031 marks a significant shift, aligning Florida with other states by removing a unique tax burden. The anticipated economic boost, particularly for small businesses and startups, could drive job creation and innovation across the state. However, both landlords and tenants must act proactively to ensure compliance and maximize benefits. Early coordination, system updates, and clear communication will ensure a seamless transition.

This post is for informational purposes only and does not constitute legal advice or create an attorney-client relationship. Always consult a licensed attorney in your jurisdiction for advice tailored to your circumstances.