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On May 25, 2023, Gov. Ron DeSantis signed H.B. 7063, providing for $1.3 billion in tax relief to Florida residents. Combined with other legislation passed this session, the overall tax savings could pass $2 billion. Highlights of the newly enacted law include (but are not limited to):
- Reducing the sales and use tax rate on commercial (business) leases to 4.5% (from 5.5%) beginning December 2023 (with a further reduction to 2%, passed in the 2021 legislative session, expected to become effective in late 2024).
- Delaying Florida’s motor fuel tax on natural gas to Jan. 1, 2026 (originally scheduled for Jan. 1, 2024).
- A permanent sales tax exemption for the purchase of certain machinery and equipment used to produce, store, transport, compress, or blend renewable natural gas.
- Permanent exemptions for purchases of certain oral hygiene products, firearm safety devices, adult incontinence products, and baby and toddler products such as cribs, playpens, strollers, and diapers.
- A sales tax exemption from July 1, 2023, through June 30, 2024, on purchases of certain Energy Star-certified appliances, as well as gas ranges and cooktops.
- Expansive expanded sales tax holidays.
The expanded sales tax holidays include exemptions for specific admissions and outdoor activity supplies from May 29 through Sept. 4, 2023; this three-month holiday is referred to as “Freedom Summer.” Certain purchases of admissions to live music events, sporting events, cultural events, specified performances, movies, museums, state parks, and fitness facilities are exempt from sales and use tax during the tax holiday period. Exempt outdoor activity item purchases (but not the rental of such items) include boating and water activity supplies and children’s athletic equipment and toys, among other defined items.
Also included are an expanded sales tax holiday for back-to-school supplies and clothes; two sales tax holidays for disaster preparedness supplies; and one sales tax holiday for power tools and equipment commonly used in skilled trades. The first disaster preparedness holiday, which began on May 27 and runs for two weeks through June 9, includes exemptions for cleaning supplies and other household items, as well as pet supplies including pet food and medications.
What does CohnReznick think?
It is recommended that businesses review the application of Florida’s expansive sales tax exemptions. Lessors of commercial real estate need to be mindful of the 1% reduction in state sales tax rate on business real estate rentals as of December 2023 with the promise of a permanent 2% tax rate on such commercial rentals in late 2024. In addition, the sales tax holidays and permanent exemptions will require both Florida and multi-state businesses to review and adjust their tax engines to support proper tax treatment of newly exempt items. This should include reviewing proper taxability of qualified items purchased through marketplace facilitators.
One thing that’s certain is H.B. 7063 will offer much-needed relief to businesses and residents of Florida still recovering from the devastation caused by Hurricane Ian.
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Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice specific to, among other things, your individual facts, circumstances and jurisdiction. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.