The Florida House on Friday approved a sweeping tax package that would lower the state sales tax rate, cut taxes on commercial leases, and overhaul the use of Tourist Development Tax revenues, advancing one of the largest tax cut measures in state history to the Senate.

Lawmakers passed HB 7033, sponsored by Rep. Wyman Duggan, which would reduce Florida’s general sales tax from 6 percent to 5.25 percent beginning January 1, 2026, marking the first broad-based rate reduction since 1988. The bill would also lower the sales tax on commercial leases from 2 percent to 1.25 percent, decrease the tax on electricity from 4.35 percent to 3.6 percent, and reduce taxes on new mobile homes and amusement machine receipts. Related administrative adjustments would update sales divisors used for vending and amusement machines.

Under the bill’s purview, Tourist Development Tax revenues would be fundamentally restructured. Starting July 1, 2025, counties would be permitted to use TDT funds for any public purpose rather than restricting expenditures to tourism-related activities. Beginning in the 2026-2027 fiscal year, counties would be required to dedicate at least 75 percent of adjusted TDT collections (revenues remaining after debt obligations) to ad valorem property tax relief through credits on property tax bills.

Moreover, tourist development councils would be dissolved statewide by December 31, 2025, unless specifically reauthorized by local governments.

The bill also expands property tax exemptions for affordable housing by broadening the nonprofit land lease exemption to cover nonprofit tenants leasing property from housing finance authorities and extends the exemption to improvements on the property. A separate exemption is created for affordable multifamily housing projects built on state-owned land, provided the property is reserved for low- and moderate-income tenants for at least 60 years. The legislation further eliminates the ability of local governments to opt out of the “missing middle” affordable housing tax exemption after July 1, 2025, making it mandatory across the state.

Additional provisions include delaying the implementation of the natural gas fuel tax scheduled for 2026, maintaining a freeze on local communications services tax rates, reducing the pari-mutuel tax rate on cardrooms from 15 percent to 10 percent, and updating Florida’s corporate income tax code to conform to recent changes to the Internal Revenue Code.

Two amendments were adopted prior to passage. The first prohibits counties from renewing or extending existing TDT-backed contracts beyond their original terms but permits refinancing of outstanding bonds without increasing their maturity or principal beyond the cost of issuance. The second amendment strengthens financial reporting compliance for local governments, requiring certification of compliance when submitting audits and authorizing the Auditor General to enforce corrective actions within specified deadlines.

A legislative analysis projects that the bill would result in a recurring revenue reduction of approximately $5.5 billion annually.