Comprehensive Tax Reform in Florida: An Analysis of HB 7033 and SB 7034

As Florida’s 2025 legislative session advances, two sweeping tax proposals have emerged at the center of fiscal policy debates: House Bill 7033 (HB 7033) and Senate Bill 7034 (SB 7034). Both bills aim to deliver tax relief, but they differ substantially in their methods. HB 7033 centers on reducing the state sales tax rate, including the tax on commercial rent, while SB 7034 focuses on targeted exemptions and tax holidays. This article provides a detailed comparison and analysis for tax professionals and policymakers seeking to understand the scope and implications of each proposal.

House Bill 7033: Broad-Based Sales Tax Reductions and Structural Reform

HB 7033 proposes Florida’s most significant tax rate cuts in decades. The bill is designed to stimulate economic activity and provide long-term tax relief by broadly lowering sales tax rates across several categories, while also restructuring local tax authority and administrative rules around taxable transactions.

Key Provisions:

1. Reduction of the General Sales Tax Rate:

   • The state sales tax on most taxable transactions under Section 212.05, F.S., would be reduced from 6% to 5.25%, effective January 1, 2026. This change affects nearly all tangible personal property sales in the state and will reduce the tax burden on consumers and businesses alike.

2. Commercial Rental Tax Cut:

   • The state tax on commercial real property leases is scheduled to drop from 2.0% to 1.25%, representing one of the most substantial cuts in the history of the commercial lease tax in Florida. This change is expected to benefit retailers, office tenants, and landlords operating in Florida’s competitive real estate markets.

3. Additional Sales Tax Reductions:

   • Electricity: Reduced from 4.35% to 3.6%

   • Coin-operated amusement machines: Reduced from 4.0% to 3.25%

   • New mobile homes: Reduced from 3.0% to 2.25%

   • Vending machine sales: Reduced from 6.0% to 5.25%

   • Service warranties: Reduced from 6.0% to 5.25%

4. Conforming Statutory Changes:

   • Related statutes and calculations (such as those for energy and vending machine allocations) are updated to reflect the reduced rates. This ensures uniformity across tax collection and reporting systems.

5. Revenue Impact and Fiscal Outlook:

   • The total recurring revenue reduction is projected at $4.89 billion per year for the state and $539.7 million per year for local governments. The impact will be significant, requiring careful budget adjustments to maintain state services.

6. Tourist Development Tax (TDT) Overhaul:

   • HB 7033 initiates a profound restructuring of how counties may use tourist development taxes.

   • Once all current contractual obligations are met, counties must divert excess TDT revenue to either offset countywide ad valorem taxes or support general public services.

   • The bill prohibits renewal or extension of promotional contracts and sunsets tourist development councils unless directly tied to existing debt service or capital projects.

   • This shift aims to limit long-standing reliance on tourism marketing subsidies, encouraging counties to reprioritize fiscal resources and reevaluate ongoing public-private partnerships.

7. Non-Ad Valorem Assessment Restrictions:

   • HB 7033 imposes new restrictions on the use of non-ad valorem assessments, particularly where counties have attempted to fund recreational vehicle (RV) park services or other tourism-centric infrastructure using narrowly-applied assessments. The bill mandates stricter standards for determining the special benefit and proportionality of any such levy.

8. Freight Forwarding and Dealer Registration Reform:

   • The bill addresses persistent issues related to international commerce and tax situs for exported goods.

   • Defines “forwarding agent” and allows qualified agents to obtain a Florida Certificate of Forwarding Agent Address.

   • Vendors shipping goods to certified addresses are not required to collect Florida sales tax, provided the forwarding agent is properly certified, maintains export-related records, and is engaged primarily in international export.

   • The bill also sets compliance standards for recordkeeping, certification renewal, and the electronic verification process.

   • These changes provide clarity for logistics and freight firms, aligning Florida law with international norms and reducing tax friction for exporters.

Senate Bill 7034: Targeted Exemptions, Seasonal Relief, and Economic Development Incentives

SB 7034 takes a more surgical approach to tax relief, focusing on specific exemptions and short-term tax holidays. It seeks to support middle- and low-income households, seasonal businesses, and disaster resilience through selective fiscal tools.

Key Provisions:

1. Permanent Sales Tax Exemptions:

   • Clothing and footwear items priced at $75 or less.

   • Precious metal bullion (gold, silver, platinum) with a per-transaction value under $500.

2. Comprehensive Sales Tax Holiday Calendar (CY 2025):

   • Disaster Preparedness: May 15–31 (batteries, flashlights, tarps, generators).

   • Freedom Summer: June 1–July 31 (event admissions, pool supplies, outdoor gear).

   • Back-to-School: August 1–10 (clothing, school supplies, laptops).

   • Skilled Workers Tools Holiday: August 29–September 7 (hand tools, safety gear).

   • Hunting and Outdoor Equipment Holiday: September 8–December 31 (firearms, ammunition, tents, crossbows).

3. Motor Vehicle Registration Credit:

   • One-time credit for any vehicle registered as of June 30, 2025, or newly registered after July 1, 2025. The credit will apply against the base registration fee and is designed to offset inflationary pressures on transportation.

4. Home Away From Home Tax Credit Program:

   • A new tax credit offered against corporate income, sales, and insurance premium taxes for contributions to qualifying nonprofits that provide housing for families receiving long-term out-of-area medical treatment.

5. Rural Community Investment Program:

   • Authorizes tax credits for investments in state-certified rural development funds. Credits are capped annually and subject to approval by the Department of Commerce. Eligible investments must target job creation and infrastructure improvements in rural or economically distressed areas.

6. Administrative Reform of Tax Appeals and Assessment Procedures:

   • The bill modernizes Florida’s value adjustment board (VAB) process.

   • Petitioners may now request remote hearings using teleconferencing tools.

   • Hearing procedures are standardized, and counties are mandated to adopt uniform rules regarding the submission of evidence and scheduling.

   • The Department of Revenue is empowered to enforce compliance, expanding the state’s oversight of local VAB processes.

Comparison and Policy Implications

While both bills are framed around tax relief, they serve different constituencies and fiscal philosophies:

Conclusion

HB 7033 represents a landmark structural reform to Florida’s sales tax regime, with far-reaching consequences for businesses, local governments, and the state’s long-term fiscal planning. Its reduction of the general sales tax and commercial rent tax, combined with limitations on discretionary local tax uses, positions it as a transformative policy aimed at long-term growth.

In contrast, SB 7034 delivers immediate, tangible benefits to consumers and targeted sectors, including education, disaster preparedness, and healthcare nonprofits. It provides temporary relief rather than structural change but enjoys bipartisan appeal due to its accessible and timely incentives.

Tax professionals should prepare clients for potential impacts from either or both bills, including updates to point-of-sale systems, real estate lease agreements, export certifications, and audit procedures. The final outcome of the 2025 session will likely depend on reconciliation between these competing tax philosophies.

© 2025 Jeanette Moffa. All Rights Reserved.