The Ultimate Guide to Collecting and Paying Sales Tax in Florida
The Sunshine State is open for business. And that means collecting sales tax on just about everything from automobiles to rental income.
If you are new to business in Florida or just need clarification on sales tax rates in Miami, you’re in the right place.
We’ll walk you through the ins and outs of sales tax in Florida.
Does Florida Have a Sales Tax?
Yes. Florida has a statewide sales tax.
Counties and local governments can charge an additional tax. They call this a discretionary sales tax and the maximum is 2.5%.
What’s the Florida Statewide Sales Tax Rate?
It’s 6% on most goods and services.
Are there any exceptions to the 6% rate?
Yes. There are three.
Amusement Machines – 4%
First, the tax rate for amusement machines is 4%.
What’s an amusement machine? Think of:
arcade or video games
Anything that uses a coin or token for entertainment or amusement qualifies. However, if the machine is operated by a church or synagogue, it’s tax-exempt.
Lease of commercial real property – 5.5%
Second, the tax rate for lease or license of commercial real property is 5.5%.
What qualifies as commercial real property? Examples include:
commercial office space
commercial retail space
convention or meeting rooms
All charges the tenant is required to pay are taxable. For example, if the lease requires the tenant to pay common area maintenance fees, in addition to rent, these maintenance fees are subject to sales tax.
There are exemptions for leases to non-profit organizations, governmental entities, and certain agricultural property.
Electricity – 6.95%
Finally, the tax rate on the sale of electricity is 6.95%.
Electricity providers, such as Duke Energy and FPL, collect this tax from their customers.
Which Counties in Florida Have a Discretionary Sales Tax?
Sixty-six of the 67 Florida counties collect a discretionary sales tax. It’s collected on the same goods and services as the statewide sales tax.
Does the discretionary sales tax change or expire?
Many counties have expiration dates for the discretionary sales tax. For example, Broward county’s expires on December 31, 2048.
And counties can add a sales tax if they haven’t reached the 2.5% cap. They can extend expiration dates too.
To see the current expiration dates, head over to the Florida Department of Revenue’s website.
So, What’s Subject to Sales Tax in Florida?
Anything sold, including both goods and services, in Florida is subject to sales tax unless it’s exempt.
It’s easier to discuss what’s exempt rather than what’s taxable.
Common groups of goods exempt from sales tax are:
medical test kits. Things like allergy, blood sugar, and urinary tract infection test kits. It includes blood pressure monitors too.
common household remedies. Think of most over-the-counter medicines and first-aid supplies.
prosthetic and orthopedic appliance prescribed by a licensed medical professional. This includes things like artificial limbs, back braces, canes, dentures, and hearing aids.
optical goods. Pretty much all prescription eyeglasses and contact lenses are exempt.
products for menstrual flow
general groceries. However, food that’s prepared and packaged for immediate consumption is taxable.
some infant supplies. Baby food, formula, teething lotions, and oral electrolytes are included in this group.
seeds and fertilizers. Fungicides, herbicides, and pesticides are included in this group
bibles, hymn books, and prayer books
official flag of the state of Florida
Online Sellers Selling Goods in Florida
Florida doesn’t require all out-of-state sellers to collect and remit Florida sales tax.
As of this writing (May 2020), Florida doesn’t recognize the economic nexus requirement. Economic nexus looks at other criteria beyond physical presence to determine whether a company must collect sales tax.
If you’re an out-of-state seller and have any of the following connections to Florida, they will require you to collect Florida sales tax.
have employees, agents, or independent contractors who conduct sales or other business activities in Florida
maintain an office or other place of business in Florida
assemble, install, service, or repair products in Florida
own, rent, or lease real property or tangible personal property in Florida
deliver goods to Florida customers using your company-owned or leased truck
Most online sellers without a meaningful physical presence in Florida won’t have to collect sales tax.
Residential Rental Properties in Florida
Residential rentals of six months or less are subject to sales tax in Florida. This includes rentals of rooms, timeshares, mobile homes, vacation homes, or second homes.
These rentals are subject to the 6% sales tax and the county discretionary tax.
Additionally, some counties also impose an optional transient rental tax. These taxes can be called:
tourist development tax
convention development tax
tourist impact tax
municipal resort tax
This tax is generally used to promote tourism or to complete beach and shoreline maintenance.
These optional taxes are sometimes paid directly to the county; unlike the state sales tax and discretionary sales which are paid directly to the state.
You can find a list of the counties that charge the transient rental tax on the Florida Department of Revenue’s website.
Registering for a Sales Tax License in Florida
You’ll need to complete sections 1 -13 of Form DR-1, Florida Business Tax Application to register your business to collect sales tax or you can use the online application option on the Florida Department of Revenue’s website.
Know that if you have more than one business location in Florida (including rental properties), all locations must be registered.
How to File and Pay Sales Tax in Florida
Most new businesses are set up to file and pay sales tax quarterly. However, this can change based upon the amount of annual sales tax you collect.
You’ll use Form DR-15, Sales and Use Tax Return if you want to mail your return.
However, if you file and pay online on-time, you can deduct a collection allowance. This allowance is 2.5% of the first $1,200 in tax due. The maximum deduction is $30 for each return. If you’re a monthly filer, this could be a $360 savings.
When to File Sales Tax Returns in Florida
Returns are due on the 1st of the month following each reporting period. Returns are late after the 20th of the month.
You must still file even when no tax is due. Failing to file one of these “zero returns” may get you a penalty.
Late filed returns
For returns received after the 20th of the month, a penalty of 10% of the amount of tax due may be charged. A minimum penalty of $50 will be charged, even if no tax was due.
FAQ’s About Florida Sales Tax
FAQ #1: I sublease part of my commercial office space. Do I need to collect sales tax on the sublease?
Answer: Yes. But you can take a credit for the amount of sales tax you pay your landlord for the same space.
For example, you rent 500 square feet of office space for $500. And you sublease 250 square feet of that for $300.
You paid $27.50 ($500 x 5.5%) to your landlord for sales tax. You collect $16.50 ($300 x 5.5%) for the sublease. The amount of sales tax you paid for the 250 square feet is $13.75 ($27.50 x 50%).
You can take the $13.75 as a credit against the $16.50 you collected. So, you owe $2.75 in sales tax.
Note: This example presumes there is no county discretionary sales tax to worry about.
FAQ #2: Are the limitations on how much discretionary sales tax can be charged?
Answer: Yes. The discretionary sales tax applies to the first $5,000 of tangible personal property when it’s sold as a single item, in bulk, or as a working part of an entire unit.
For example, if you purchased a travel trailer for $10,000 in a county with a 1% discretionary tax. You’ll pay $650 ($10,000 x 6% = $600 for state sales tax + $5,000 x 1% = $50 for discretionary tax).
FAQ #3: Are nonprofit organizations exempt from paying sales tax in Florida?
Answer: Some are. Specifically:
Florida Retired Educators Association, and its chapters
nonprofit cooperatives hospital laundry
nonprofit water systems
organizations benefiting minors
schools, colleges, or universities
volunteer fire departments
These types of organizations will need to complete Form DR-5, Application for a Consumer’s Certificate of Exemption to get a certificate of exemption.
These exemptions expire every five years and are automatically reviewed by the Department of Revenue. You won’t need to submit a renewal application.