Florida Accelerates Cut in Commercial Lease Tax
In a significant development for the business community, Florida’s Department of Commerce has announced an earlier-than-anticipated reduction in the state’s tax on commercial leases. The tax rate is set to drop to 2% by June 1, a full two months ahead of schedule. This move comes as a result of legislation signed by Governor Ron DeSantis, which not only mandated online retailers to collect sales taxes but also provisioned for a cut in commercial rent tax from 5.5% to 2%.
The legislation, known as SB 50, was passed in 2021 and has since contributed nearly $1 billion to Florida’s revenue through online sales tax collection. The additional revenue has played a pivotal role in replenishing the state’s unemployment trust fund, which had been significantly depleted during the COVID-19 pandemic. The fund’s recovery to its pre-pandemic level of $4 billion has triggered the early implementation of the tax cut.
The reduction in commercial lease tax is expected to ease financial pressures on businesses across the state. Secretary of Commerce Alex Kelly lauded Governor DeSantis’ fiscal policies for their role in reducing tax burdens and fostering economic resilience. “By slashing Florida’s Commercial Lease Sales Tax by more than half, we are easing the strain on Florida employers making it easier for them to grow their business, hire new employees and continue to thrive,” Kelly stated.
Previously, the Legislature had scheduled a decrease in the business rent tax to 4.5% starting December 1, 2023. However, with the accelerated timeline, businesses will now see a more substantial drop of 2.5 percentage points this June. This tax cut is particularly meaningful for business groups who have long advocated for such a measure. Over the past decade, efforts to recover from the Great Recession saw lawmakers reduce the tax incrementally from 6% to 5.5%.
The commercial lease tax currently generates approximately $1.3 billion annually at the existing rate. With the impending reduction, Florida businesses are poised to benefit from significant savings, which could potentially be redirected towards expansion and job creation, further bolstering the state’s economy.
