NFIB: Florida businesses will see rent tax cut on Dec. 1, but it should be even lower

by | Nov 21, 2023

Bill Herrle

By now, Florida businesses should have received letters from their landlords saying the taxes on their commercial rents and leases will be cut by 1 percent on Friday, Dec. 1.

My organization, the National Federation of Independent Business, strongly supported the 2023 legislation that slashed the sales tax on commercial leases from 5.5 percent to 4.5 percent and additional legislation that will further reduce it to 2% in the second quarter of 2024.

We’d like to see it fall to zero in 2025.

When lawmakers return to Tallahassee in January, our small business members will encourage them to eliminate this onerous tax once and for all.

Under the legislation taking effect on Dec. 1, the average Florida Class A commercial lease is going to save $360 a year on every 1,000 square feet that’s rented. The savings for a Class B commercial will be $268, while employers with Class C commercial leases are going to save $190.

That might not sound like a lot, but it adds up. Every 1% of the sales tax on commercial leases cuts returns approximately $300 million to Florida small business owners. That’s a lot of money, especially now, when small businesses are contending with inflation that continues to drive up the cost of everything from raw materials to shipping to shopping bags.

And it’s a burden that’s unique to businesses that operate in Florida. There isn’t another state in the union that makes businesses pay a tax on their monthly rent. Even a business owner who owns their business property under another legal entity must pay the tax when they pay rent from one wholly owned entity to another.

Imposing a sales tax on commercial leases hinders a common asset-building strategy for our local job creators, making it more difficult for them to expand their operations, create new jobs, and raise wages. That’s why NFIB has been key-voting this issue in Tallahassee for years.

NFIB will not stop until the sales tax on commercial leases is totally eliminated. It’s estimated that repealing the business rent tax would save Florida businesses and consumers over $1 billion a year.

This is a tax that the Florida legislature could eliminate. The last few years have seen record revenues coming into the state coffers. It’s more than past time to take a small portion of those record revenues and return them to the job creators.

Bill Herrle is the National Federation of Independent Business’s executive director for Florida.


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