TAX ON COMMERCIAL RENT WILL DECREASE IN DECEMBER 2023
In Florida, sales tax is charged on the rental of commercial property. Businesses that rent office space, retail space, or warehouses are required to pay sales tax on the amount of their lease. The amount of tax charged is the state sales tax rate of 5.5% plus the local county sales tax rate.
Effective December 1, 2023, the state sales tax rate for commercial rent is decreasing from 5.5% to 4.5%.
To determine the full amount of sales tax due on commercial rent, you have to add in your local county’s sales tax rate (also called the discretionary sales tax). Every county in Florida has a local sales tax that is charged in addition to the state sales tax. These county tax rates range from .5% to 1.5%.
Add your county’s tax rate to the state sales tax rate of 4.5% to determine the total amount of sales tax that will be charged on your lease, unless the property you lease is located in Citrus county. Citrus county does not have a local sales tax.
For example, Hillsborough county’s local sales tax rate is 1.5%. Every commercial lease in Hillsborough county is subject to the state rate of 4.5% (effective December 1st) plus an extra 1.5% for the local sales tax, for a total sales tax rate of 6%.
Rental charges paid on or after December 1st for rental periods prior to December 1, 2023 are subject to the current tax rate of 5.5% plus the applicable local tax. Rental payments made prior to and after December 1st that are for rental/lease on or after December 1, 2023 will be subject to the new rate of 4.5% plus the applicable local tax.
A brochure from the Florida Department of Revenue is available here.
COMMON HOLIDAY PAY QUESTIONS FROM EMPLOYERS
With both Thanksgiving and Christmas falling on typical workdays this year, employers may have questions about paying their employees. Here are some common questions from employers.
If my business is open on a holiday like Thanksgiving or Christmas, do I have to pay my employees extra for working on a holiday? No. Extra pay or holiday pay is not required in Florida.
If my business is closed for a holiday during the workweek like Thanksgiving or Christmas, do I have to pay my employees for the day the business is closed? It depends on the employee’s status. With one exception, employers are not required to pay employees when they’re not working, like vacations or holidays. Only employees classified as “exempt” have to be paid for days the business is closed. See below for more information.
Hourly employees: In general, hourly employees are paid only for hours they actually work. If a business is closed for a holiday, an hourly employee does not need to be paid, unless your business has established a different policy.
Salaried employees: Salaried employees are classified as either exempt or nonexempt under federal wage and hour laws. A salaried employee’s exemption status determines if they have to be paid when the business is closed for a holiday.
- Exempt employees must be paid when the business is closed during the workweek for a holiday. To be considered “exempt” under the Fair Labor Standards Act, the employee must (1) receive a salary of at least $684 a week and (2) have high-level job duties that qualify them for one of the five exemptions from overtime. Exempt employees are not entitled to overtime if they work more than 40 hours in a workweek, but they must be paid their full salary for any week in which they do any work, regardless of the number of days or hours they work.
- Nonexempt employees do not have to be paid when the business is closed during the workweek for a holiday. “Nonexempt” employees are those salaried employees whose pay or job duties do not meet the requirements for one of the five exemptions from overtime discussed above. While some businesses choose to provide paid holidays for nonexempt employees, it is completely the employer’s decision whether to pay nonexempt employees for holidays.
Do I have to pay overtime in a week with a holiday? Overtime is required for hourly employees and salaried nonexempt employees if they work more than 40 hours in a workweek.
If your business is closed on Thanksgiving Day and your hourly or nonexempt salaried employees work more than 40 hours on the remaining days of the workweek, they are entitled to overtime.
If your business is closed for Thanksgiving Day, that day does not count as time worked. Your employees can work up to 40 hours the other days of the workweek without getting paid overtime. This is true even if you pay your employees for a full day on Thanksgiving. Overtime is calculated only on the hours the employee actually works. Hours where the employee is paid but does not work (like a paid holiday) do not count towards the 40 hours.
INSURANCE POLICIES NO LONGER PROTECTED FROM CANCELLATION STARTING NOVEMBER 1ST
After Hurricane Idalia, insurance policies were protected from cancellation in Florida, even if the policyholder was behind on their premium payments. This cancellation moratorium expired on November 1, 2023, and insurance companies may again resume issuing cancellations to delinquent policyholders. If you have questions about the status of your insurance policies, contact your local insurance agent for assistance.
WORKERS’ COMP RATE DECREASE PROPOSED IN FLORIDA
The Florida Office of Insurance Regulation is considering a rate decrease of -15.1% to the rates Florida businesses pay for workers’ comp insurance. If approved, the rate decrease would apply to policies as they are issued or renewed starting January 1, 2024. The rate decrease of -15.1% is the average reduction over all industry types and would be the largest rate decrease in workers’ comp rates in a decade.