Business Rent Tax in Florida: Full Repeal in 2025-2026 Fiscal Year Budget

As of June 30th, Florida lawmakers have approved a full repeal of the state’s Business Rent Tax (BRT) as part of the FY 2025–26 budget package. This historic move comes after decades of gradual reductions—most recently lowering the tax to 2% in June 2024—and marks the first time the Legislature has eliminated the longstanding tax on commercial leases.

Under House Bill 7031, both the state-level 2% tax and accompanying local discretionary surtaxes are eliminated, making Florida one of the last states to fully repeal this sales tax on commercial real property. The measure passed the Florida Senate on June 16 and the House shortly thereafter, finalizing legislative approval of the $115.1 billion budget and $1.3 billion in tax cuts. Governor Ron Desantis officially signed the legislation on June 30th.

Implications for Jacksonville Landlords and Investors

Landlords can expect no state-level tax on rent for commercial leases beginning October 1, 2025. Importantly, local discretionary surtaxes, which were 1.5% in Duval County, will also be repealed under the same bill, meaning the total elimination of lease tax at both the state and local levels.

Tenants will benefit from simplified lease structures and reduced occupancy costs, prompting landlords to revise lease agreements to remove tax pass-through provisions. These changes are likely to shift lease negotiations and may improve lease-up velocity in competitive submarkets.

Property owners will also see immediate improvements in net operating income (NOI) after the repeal takes effect, potentially enhancing property valuations and making Florida-based investments more attractive. However, taxes owed for occupancy periods prior to October 1 will still be due, regardless of whether they are remitted before or after the repeal date. Landlords should continue filing returns for those months, even if no tax is collected after the repeal, to maintain proper compliance records.

Commercial real estate investors should begin modeling the effects of the repeal on pro forma returns and acquisition underwriting. Jacksonville’s market in particular stands to gain, as it becomes more competitive with peer cities in states that do not tax commercial leases. At the same time, local governments such as Duval County will need to address the loss of BRT revenue, which may have future implications for local public service funding or fee adjustments elsewhere.

Why It Matters in Jacksonville

Jacksonville, with its growing base of business activity and steady demand for office, industrial, and retail space, is well-positioned to benefit from a more favorable tax environment. The repeal reduces one of the key costs of doing business in Florida and helps align the state more closely with national norms. Statewide, the change is expected to deliver between $900 million and $1.3 billion in annual tax relief to businesses.

Final Take

Landlords and investors should begin preparing now by reviewing leases, adjusting underwriting assumptions, and informing tenants of the forthcoming change. This change marks a significant win for Florida’s business climate and markets like Jacksonville that are competing for tenants, capital, and growth in the post-pandemic CRE landscape. 

Contact Us

If you would like to learn more, please reach out to db@naihallmark.com