FloridaCommerce announced a reduction in the commercial lease sales tax rate from 4.5 percent to 2.0 percent, effective June 1, 2024, expected to save business owners $1 billion.
FloridaCommerce, the state’s business advocacy group, announced on Monday a decrease in the commercial lease sales tax rate from 4.5 percent to 2.0 percent, slated to take effect on June 1, 2024.
The reduction is expected to deliver an estimated $1 billion in tax savings to business owners across the state and is part of legislation aimed at stimulating economic growth and reducing operational costs for businesses within Florida.
“Florida continues to alleviate tax burdens for Floridians and keeps our economy resilient to federal pressures,” said Florida Secretary of Commerce J. Alex Kelly. “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.”
The tax cut stems from a 2021 legislative move that expanded sales tax collection to include purchases from out-of-state vendors by Floridians, alongside efforts to replenish the state’s unemployment trust fund, as reported by News Service of Florida. The saw depletion due to the economic impacts at the onset of the COVID-19 pandemic, culminating in legislation that outlined a provision for reducing the commercial lease tax as a reward for restoring the unemployment fund to its former standing.
As a preliminary action in the 2023 legislative session, the tax was decreased from 5.5 percent to 4.5 percent starting July 1, coinciding with the onset of the fiscal year, reflecting a step towards further financial relief for businesses.
A February study released by the Regional Economic Consulting Group (REC Group) highlighted potential economic benefits of eliminating Florida’s tax on commercial leases, suggesting a significant boost to the state’s economy.
According to the findings, doing away with the state’s commercial rent tax could lead to more than $19.7 billion in new developments statewide over five years, creating approximately 59,000 jobs in construction and related operations. The study projected an initial revenue loss of $976.8 million from the tax cut, which could be offset by increased tax revenues generated from the ensuing economic activities — $193.8 million from construction and $24.1 million from operations and maintenance.
“Eliminating this tax, even from the expected lower rate, would result in significant returns to the state economy,” reads the report. “While the full elimination presents a reduction to the State’s coffers, the full economic benefits to Florida’s economy more than exceeds the loss to the government.”
The analysis utilized a combination of static and dynamic models to assess both the immediate and long-term impacts of this policy change. It suggested that for every dollar lost in revenue, the state’s economy could grow by $6.52, a figure that improves to $8.39 when accounting for the new tax collections that would mitigate the initial losses.
“Nearly one thousand people move to Florida every day,” the report continues. “It is essential to remove this tax burden to allow for more investment in housing, retail, and development to support growth and keep Florida one of the top-performing economies in the world’s largest economy.”