Commercial rent phaseout could cost state budget more than $1B a year – Washington Examiner
The state of Florida is set to eliminate the sales tax on commercial rentals, a move expected to reduce revenue for the state and local governments by more than $1.5 billion annually by 2030,according to estimates from the Office of Economic and Demographic Research. Governor Ron DeSantis signed the budget including this tax repeal in June, ending Florida’s unique status as the onyl state taxing commercial rentals. The tax covered not only base rent but additional landlord charges such as maintenance,utilities,insurance,and property management fees.The phaseout is part of a larger $1.3 billion tax relief package and will led to significant revenue losses, starting with an estimated $679 million this fiscal year and rising to over $1 billion by 2029-30. Local governments will also see decreased revenues due to the removal of local option sales taxes on commercial rentals. The analysis comes as lawmakers consider other tax-related measures,including increased excise tax contributions to medical centers and exemptions on sales of gold and silver bullion.
Commercial rent phaseout could cost state budget more than $1B per year
(The Center Square) – According to state estimates, the ending of sales tax on commercial rentals could cost the state’s general fund and local governments more than $1.5 billion annually by 2030.
The Office of Economic and Demographic Research did a recent analysis on the legislation passed in the legislative session that concluded on June 17.
Gov. Ron DeSantis signed the budget into law in June and part of that deal was the elimination of the levy of sales tax on commercial rentals. Until the elimination, the Sunshine State was the only state to tax commercial rentals and the move was supported by the National Federation of Independent Businesses and Florida TaxWatch.
The biggest line item in the $1.3 billion tax relief package was the commercial rental sales tax elimination.
State officials estimate axing the tax on Oct. 1 will cost the state’s coffers $679.1 million this year, $926.7 million in fiscal 2026-27, $951.9 million in fiscal 2027-28, $981.3 million in fiscal 2028-29 and slightly more $1 billion by fiscal 2029-30.
For counties that levy a local option sales tax, it would add up to $371.6 million for this fiscal year, $478.3 million for fiscal 2026-27, $451.7 million for fiscal 2027-28, $445 million for fiscal 2028-29 and $448 million for fiscal 2029-30.
The state previously mandated that landlords pay sales tax on commercial rent payments. These taxes not only apply to base rent, but also charges for maintenance to common areas, utilities, insurance, real estate taxes and property management fees. Landlords usually pass these costs onto renters.
In 2017, the tax rate was cut from 6% to 2%.
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Officials also examined a bill that doubled contributions from the state’s excise taxes on alcohol to some medical centers statewide and another that would remove sales tax on the sale of gold and silver bullion.
The Office of Economic and Demographic Research is the Legislature’s research arm, which provides economic and social trend forecasts for policymaking, revenues and appropriations.
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