Florida’s business rent tax set to drop to 2%

Sunshine State consumers are bullish on the economy.

Florida’s tax on commercial leases is set to drop to 2% by June 1, about two months earlier than expected, the Department of Commerce announced.

Gov. Ron DeSantis signed legislation (SB 50) passed in 2021 requiring online retailers to collect sales taxes from consumers, a measure that added nearly $1 billion to Florida’s revenue.

But another piece of the bill cut the state’s 5.5% tax on commercial rents to 2%, starting two months after Florida’s unemployment trust fund — which had been depleted during the COVID-19 pandemic — returned to its pre-pandemic level of $4 billion.

The move prevented an increase in unemployment taxes businesses pay to replenish the trust fund, which normally kicks in when the fund is reduced so dramatically. But after the pandemic hit in 2020, the federal government was paying Florida and all states to pad unemployment benefits by $600 per week.

State economists initially projected the trust fund to be replenished by this Summer, but it has already hit that level. A release from the Department of Commerce said the trust fund hit $4.1 billion on March 21.

“Thanks to Governor DeSantis’ strong fiscal policies, Florida continues to alleviate tax burdens for Floridians and keeps our economy resilient to federal pressures,” Secretary of Commerce Alex Kelly said in a released statement.

“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.”

A year after passing SB 50, the Legislature reduced the business rent tax to 4.5% starting Dec. 1, 2023, so the drop felt by businesses on June 1 will be 2.5 percentage points.

The tax brings in about $1.3 billion a year under the current rate.

Cutting the tax on commercial leases is something business groups have sought for years. In the previous decade, as Florida climbed out of the Great Recession, lawmakers reduced the tax from 6% to 5.5%.