Florida is the only state in the nation that charges a sales tax on commercial leases. A new law will reduce the commercial rent tax from 5.5% to 2%. The difference in lost tax funds will come from a new sales tax on out-of-state online retailers.
The Florida Chamber of Commerce worked for nearly two decades to try and equalize the tax burden between online retailers and local businesses that already collect and remit sales tax to the Department of Revenue.
Gov. Ron DeSantis signed SB 50 into law requiring out-of-state online retailers to collect sales tax on purchases made by Floridians.
Scott Shalley, president and CEO of the Florida Retail Federation, said in a statement that the reduction in the commercial rent tax creates a “level playing field” for all businesses. “With this cost-savings, Florida businesses across all sectors of the economy can reinvest in their community, create jobs, and grow their businesses,” Shalley said.
The new law is estimated to produce an added $1 billion a year in sales tax, with the money first earmarked for the state’s unemployment trust fund. The trust fund became depleted because of massive job losses during the COVID-19 pandemic.
Businesses pay taxes to the trust fund. Without another funding source, they would have faced higher taxes to replenish the fund. After the fund is replenished, the revenue will be used to cut the commercial rent tax.