Florida’s Landmark Tax Package a Boon for Consumers, Businesses

Florida’s tax relief package, part of the 2025 state budget, will deliver over $2 billion in savings and eliminates two statewide taxes. With Gov. Ron DeSantis’ (R) signature June 30, the legislation will provide significant cost savings for businesses and simplify compliance for property managers. It also will reduce aviation businesses’ costs and give millions of consumers much-needed relief via a monthlong permanent sales tax holiday.

Business Rent Tax

The repeal of the sales tax on commercial leases, known as the “business rent tax,” is the cornerstone of House Bill 7031 and will become effective Oct. 1. The complete elimination of this tax, including local discretionary sales surtaxes, will relieve tens of thousands of commercial landlords from future sales tax reporting and remittance obligations to the Department of Revenue.

Rental charges for occupancy periods on or after Oct. 1 shouldn’t include a separate line item for business rent sales tax. If sales taxes are improperly charged on rental invoices related to occupancy after Oct. 1 and those sales taxes are paid by a tenant, the landlord must remit such taxes to the DOR.

Refund claims should be pursued for any sales taxes improperly remitted to DOR after the elimination of the tax. To claim a refund, a landlord would file DOR’s application for refund and must affirmatively show the sales taxes were both remitted to DOR and have been returned to the tenant or licensee.

Alternatively, tenants and licensees may pursue refunds directly if they accompany their application for refund with DOR’s assignment of rights form, which must be completed by the landlord as assignor. Florida law provides a three-year statute of nonclaim for refund applications.

Once all applicable business rent taxes have been remitted to the DOR for periods before Oct. 1, and assuming the landlord has no other sales tax registration obligations, the business should request a change of account status either to permanently cancel or temporarily inactivate its filing status.

Failure to request an account status change could result in the landlord receiving notices or billings for future periods if it fails to timely submit the sales tax returns that the DOR is expecting to receive.

Eliminating the business rent tax will streamline compliance for commercial landlords, reducing administrative costs and simplifying lease agreements. Ultimately, the repeal of the remaining business rent tax is estimated to save commercial tenants more than $1.5 billion annually in state and local taxes.

Aviation Fuel Tax

The new legislation also repeals the aviation fuel tax effective Jan. 1, 2026, covering aviation gasoline, turbine fuels, and kerosene. As motor fuel taxes are generally levied at the rack, terminal suppliers and air carriers will need to change their systems to no longer charge the tax after the effective date.

Eliminating this tax will reduce operational costs for aviation-related businesses and is designed to improve the ability for airlines to serve Floridians and the state’s more than 140 million visitors each year.

The repeals of the business rent tax and the aviation fuel tax mark the first statewide taxes eliminated since the intangibles tax in 2006 under former Gov. Jeb Bush (R).

Consumer Tax Relief

House Bill 7031 also introduces substantial consumer-focused relief by permanently codifying the back-to-school sales tax holiday for the entire month of August each year. This sales tax holiday applies to many of the same qualifying clothing, school supplies, and technology purchases included in prior temporary holidays.

Besides giving consumers predictability, it will ease compliance for retailers by establishing a consistent list of tax-exempt items and statutorily setting the period for the annual holiday. Effective Aug. 1, the legislation includes permanent sales tax exemptions for essential hurricane preparedness items including certain batteries, tarps, ground anchor systems, fuel cans, and portable generators.

The legislation also includes permanent sales tax exemptions for fire extinguishers, smoke detectors, carbon monoxide detectors, bicycle helmets, life jackets and personal floatation devices, insect repellant, and sunscreen. Retailers need to be sure their sales systems reflect the new exemptions for these qualifying items.

Looking Ahead

The new legislation aligns well with a committee the Florida House of Representatives recently created to review options to eliminate, reduce, and modify annual caps related to property taxes. The committee’s findings are expected this fall.

This work signals potential long-term shifts, necessitating proactive planning for clients owning real estate in Florida. Any future constitutional amendments would require attorneys to guide clients through these changes.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

H. French Brown is a partner in the tax practice group at Jones Walker.

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