Florida has stood alone for years as the only state charging a business rent tax. But that ended Wednesday morning as a tax reform package went into effect.

After years of slow chipping at the unpopular tax, the Republican-controlled Legislature voted to phase it out completely. It was a move celebrated by business advocates who long argued Florida made itself less attractive to businesses by collecting the levy on commercial leases.

“The elimination of Florida’s business rent tax is a major victory for employers across the state,” said Brewster Bevis, Associated Industries of Florida President and CEO. “Beginning October 1, businesses will no longer shoulder this uniquely burdensome tax. Repealing it permanently delivers $1.6 billion in savings that can instead be reinvested into jobs, growth and Florida’s economy.”

But that means governments throughout Florida will also lose that much revenue — and then some.

Jeff Scala, a lobbyist with the Florida Association of Counties, took issue with the Legislature imposing the consequence of killing that tax on local governments. He said county governments have supported eliminating the tax but wanted to retain local sales taxes, most of which were approved by voter referendums, on business rents. The Legislature’s tax relief plan limits local governments’ ability to collect that.

“This measure will impact not only local revenue sharing but will also significantly affect revenues anticipated from the collection of local option sales taxes,” Scala said in a wrap-up webinar after the close of Session.

The reason for the concern is that the rent tax — unlike property taxes assessed against the appraised value of land — is technically itself a sales tax on rent. In counties that have approved other sales taxes — school penny taxes, for example — the local option tax has been charged in addition to the business rent tax. But without the rent tax charged in the first place, the other sales taxes won’t be added on.

That means savings — and revenue losses — far beyond the $1.6 billion collected in the business rent tax.

Still, Florida’s stand-alone status has put the tax in crosshairs for decades. First imposed in 1969, lawmakers have taken steps to phase out the tax, sometimes replacing the revenue source as it did with approval of online sales tax collection in 2021.

The issue has been especially troublesome in North Florida counties, where economic development officials are often competing with the rent tax-free business climate in other states.

Rep. Wyman Duggan, a Jacksonville Republican who chaired the House Ways and Means Committee this year, said the commercial real estate industry in Northeast Florida has been deeply concerned with the tax for at least 15 years.

“We are competing with Georgia and Alabama for businesses to expand and relocate,” he said.

“If a business is leasing space, Georgia could try and use absence inducement to locate in Georgia rather than Florida. So we are saying Florida has no income tax and a low regulatory environment, but Georgia then comes and says, you are paying less every month because of this tax on commercial leases so just move to Kingston.”

And even after tense communication between the Legislature and Gov. Ron DeSantis this year, the Republican Governor voiced enthusiasm about killing the business rent tax when he signed the budget.

“The Legislature has also done something that I’ve been asking for many years, and that’s eliminating a tax that only Florida has, of all 50 states, and that’s taxing business rent,” DeSantis said. “It’s not good for our economy. It’s not good for business growth. And so that tax is being sunsetted. How many times do you hear governments eliminating a tax?”

But some lawmakers remain concerned about whether the drive to cut more taxes each year has its own cost on the attractiveness to live and work in Florida. The state is also considering whether to slash sales taxes or to eliminate property tax altogether.

“It’s important government not get involved in controlling our speech and freedoms, but the government should be there as an asset and vessel for success. But we don’t have resources to do that,” said Rep. Anna Eskamani, an Orlando Democrat.

“I look at our budget, and we may not have deficits. But we are one of the most economically constrained states in the country, and that shows up in low teacher pay, in heavy traffic, in neighborhoods getting flooded that shouldn’t get flooded. All these things are measures of quality of life, and those deficits still matter.”

Still, even those reluctant to make broad tax cuts would not defend the business rent tax, a toll hated by small and large businesses alike.

Several Democrats voted against the tax reform package but pointed to other issues like a tax holiday on firearms and ammunition. Eskamani said she would have supported the tax cut package if it simply eliminated the business rent tax.

The same goes for Rep. Christine Hunschofsky, a Parkland Democrat in line to lead the Democratic caucus after the 2026 election cycle.

“I’ve always supported getting rid of business rent tax,” Hunschofsky said. “It’s more de facto sales tax.”

Small-business owners have opposed the tax for years, she said, and with economic uncertainty on the horizon, she voices support for easing a financial burden.

“It’s not common to have a sales tax on rent,” she said.