Florida Introduces Sales and Use Tax Exclusion for Certain Motor Vehicle Leases

Effective July 1, 2024, Florida’s Department of Revenue implemented a new sales and use tax exclusion for specific motor vehicle leases or rentals. According to Tax Information Publication (TIP No: 24A01-08), this exclusion applies to leases or rentals of motor vehicles used in the trade or established business of the lessee or renter, provided the lease or rental period is 12 months or more and the lessor has paid sales or use tax on the vehicle’s purchase price. This exclusion also extends to renewals of such leases or rentals.

The term “motor vehicle,” as defined in section 316.003 of the Florida Statutes, includes self-propelled vehicles not operated on rails or guideways, but excludes bicycles, electric bicycles, motorized scooters, electric personal assistive mobility devices, mobile carriers, personal delivery devices, swamp buggies, and mopeds.

Additionally, lessors who purchase qualifying motor vehicles outside Florida can receive a credit against Florida use tax and any applicable discretionary sales surtax. This credit applies when the vehicle is titled, registered, or licensed in Florida, provided a similar tax was lawfully imposed and paid in the other state or territory. If the out-of-state tax equals or exceeds Florida’s tax obligations, no additional tax will be due in Florida.  If the tax paid to another state is greater than the tax in Florida, no refund will be due.

This new tax exclusion aims to reduce the sales tax burden on long-term vehicle leases and rentals for businesses, fostering economic growth and operational efficiency. For further details, businesses are encouraged to review the complete Tax Information Publication or contact the Florida Department of Revenue. (Florida Department of Revenue, Tax Information Publication, No. 24A01-08, July 1, 2024)

Posted on July 5, 2024