STATE SALES TAX ON BUSINESS RENT REPEALED

Effective October 1, 2025, the state sales tax imposed on the rental of commercial property in Florida is repealed. This means no sales tax can be charged on the rental of commercial office or retail space for rental periods beginning on or after October 1st.

For decades, businesses that rented their office space, retail space, or warehouse were required to pay sales tax on their lease. For a little over a year, the tax rate charged on leases was 2% plus any local county sales tax.

Please note: Rent payments for rental periods through September 2025 are still subject to tax even if payment is made on or after October 1st. Delayed payment of rent for taxable rental periods does not avoid the tax. For example: If a tenant pays their August 2025 rent in October, state sales tax of 2% plus any applicable local sales tax still applies because the rental period was prior to October 1st.

Rent payments made before October 1st for rental periods on or after that date are not subject to tax. If your business already paid rent for October – December 2025, you can seek a refund of the tax you paid from your landlord.

More information is available from the Florida Department of Revenue at 850-488-6800 or fdortaxpayerservices@floridarevenue.com.

ADDITIONAL INFORMATION RELEASED ON “NO TAX ON TIPS”

A new federal law signed July 4, 2025 creates a temporary tax deduction for tipped workers.  From 2025 – 2028, tipped employees in qualifying occupations will not have to pay federal income tax on up to $25,000 in qualified tips they receive at work.

What is a qualified tip?
Only voluntary tips qualify for the “no tax on tips” deduction. The tip or its amount cannot be mandatory. Service charges, automatic gratuities, and other mandatory amounts added to a customer’s bill are not “qualified tips” and are still subject to federal income tax.

But if customers are expressly provided an option to disregard or modify amounts added to their bill, those amounts are considered voluntary and do count as a “qualified tip.”

If a restaurant bill includes a recommended tip of 18% but provides a line for the customer to subtract or add to the suggested 18%, any amount of tip left by the customer counts as a “qualified tip.”

Similarly, if your Point-of-Sale system prompts a customer to leave a tip in a suggested amount of 15%, 18%, 20%, other, or no tip, any amount left by the customer is a “qualified tip.”

However, if the Point-of-Sale system only provides options for 15%, 18%, or 20% with no ability for the customer to change the amount or decline to leave a tip, the first 15% is considered a service charge and does not count as a “qualified tip.” Any amount above 15% left by the customer is a “qualified tip.”

What is a qualified occupation?
To qualify for the “no tax on tips” deduction, the employee must be in a “qualifying occupation” that customarily receives tips and is on a list of qualifying occupations from the IRS.

The preliminary list of occupations includes obvious occupations like restaurant servers/wait staff and bartenders, as well as some occupations like dishwashers and cooks that do not usually receive tips.

To view the full list of qualified occupations, please visit the IRS website here. 

New recordkeeping requirements for businesses with tipped employees:
Businesses employing tipped workers must continue to report all tips received by an employee on the employee’s W-2.

In addition, starting with W-2s issued to employees in January 2026 for calendar year 2025, employers must now separately list two additional items:

  • The amount of the employee’s qualified tips in Box 12 of the W-2 form using the code “TP”
  • The employee’s qualifying occupation

Remember, the amount of total tips received by an employee may be different than the amount of “qualified tips,” because not all tips meet the definition of a qualified tip. Employees will only be able to deduct the amount of qualified tips listed by their employer on their W-2.

Because this new requirement to track qualified tips started in the middle of this year, the IRS is allowing businesses to approximate the amount of qualified tips paid to an employee in 2025 using a “reasonable method” that they will determine at a later date. Going forward, businesses with tipped employees will have to separately track both total tips and qualified tips for each employee.

REMINDER: FLORIDA MINIMUM WAGE IS NOW $14.00 AN HOUR

As we told you in last month’s newsletter, the Florida minimum wage in Florida is $14 an hour as of September 30, 2025.

For tipped employees, the minimum wage is now $10.98 an hour, not including tips. The cash wage of $10.98 an hour paid to a tipped employee must be paid in addition to tips the employee receives from customers.

A tipped employee’s wage of $10.98 an hour plus tips received from customers during their shift must add up to at least the state minimum wage of $14. If not, the employer must make up the difference.  

All Florida businesses are required to display a Florida minimum wage poster, even if all employees are paid higher than minimum wage.

As a benefit of your FUBA membership, we sent you an updated Florida minimum wage poster with last month’s newsletter.

Additional copies of this poster are free for FUBA members. You can either print additional copies from the Publications section of our website or you can request additional color copies by emailing us at FUBA@fuba.org.