(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.