Why Eliminating Property Tax in Florida is Risky
Florida Gov. Ron DeSantis is seriously considering eliminating property taxes in the state, and economists are concerned about the fallout.
During a State of the Union speech March 4, DeSantis explained his stance against what he sees as unfair taxes, saying, “You buy a home, you pay off the mortgage, and yet you still have to write a check to the government every year just for the privilege of living on your own private property.”
In Florida, property taxes fund schools, infrastructure for roads and parks, and safety net programs — like firefighters, police departments, and public hospitals. The revenue is even more critical as the Sunshine State is a no-income tax state.
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According to the latest data on statewide expenditures, Florida’s tax on real property makes up 18% of county revenue, 17% of municipal revenue, and 50 to 60% of school district revenue. It’s essentially the “domain” of local governments, as stated by the Florida Policy Institute (FPI).
Florida lawmakers have also floated raising the homestead exemption and freezing property tax hikes. Abolishing property taxes is his boldest pitch yet.
“With no income tax, and no property tax, what’s even left?” wrote Redfin chief economist Daryl Fairweather posted on X in response to DeSantis’ proposal.
Probably, a strikingly high sales tax would come into play, the kind that would likely make you wish property taxes never left in the first place.
Here’s what ending property taxes in Florida could mean for you.
Doubling Florida’s sales tax is risky
If Florida were to eliminate its property taxes today, local districts would be left scrambling to find a way to raise $43 billion or $2,015 per capita to keep its education and public services afloat.
As a no income tax state, the burden would fall on sales taxes and budget cuts.
Currently, the Sunshine State levies a 6% general sales tax. Some 20 states have a lower sales tax rate, and 15 have higher state rates. California has the highest state sales tax set at 7.25%. A no-property tax policy shift would drastically change this scenario.
- According to the Florida Policy Institute, just raising the state’s sales tax by one percentage point would increase revenue to $6.7 billion annually.
- Separately, if all county governments and school districts maxed out their local sales taxes, they would only raise an estimated $13.2 billion — only a third of property tax revenue.
To come close to filling the revenue gap of property taxes, Florida would have to double its consumption tax rate to 12%.
That would catapult Florida’s sales tax into the highest in the nation, and generate about $40.2 billion. That’s only if consumer demand remains constant. Add in potential inflationary pressures, and higher prices due to the Trump administration’s tariffs, and it’s a recipe for disaster for low to moderate-income households.
“Increasing sales taxes, whether it is at the local level or statewide, is a regressive option that would ultimately make Florida’s tax code more inequitable,” the FPI report noted.
What’s going on with Florida’s property tax
Ask a Floridian, and they’ll probably say property taxes are out of control.
The average property tax in Florida was 1.14% in 2024, that’s up 9.5% from a year earlier, and a head-turning 47.5% uptick since before the pandemic. According to CoreLogic, home prices have shot up by 14.6% annually over the past 5 years.
For Florida property owners, and would-be homebuyers, the dramatic increase in property taxes has been a pain to deal with. The average tax bill came in at $3,101 last year.
Still, the average property tax rate in the Sunshine state was right in the middle of all U.S. states, the report found, including the District of Columbia. Nationwide, the U.S. median property tax rate was $3,018.
That doesn’t erase the fact that some homeowners are sticker-shocked in Florida.
Some counties felt the pinch of property tax hikes more than others, due in part, to rapidly growing home values.
In Broward, the median property taxes were $4,469 at the 1.41% tax rate. That’s up 56.8% since 2019, home values similarly jumped by nearly 60%. It was the largest property tax jump in the nation since the pandemic, per CoreLogic.
Coming in second was Miami-Dade, another hotspot for newcomers to Florida. The average property tax was $4,396, representing an uptick of 49.5% in the five years leading to 2024. Also to blame were rising home values, which jumped close to 59% in that timeframe.
“As property values and property tax payments rise, it’s natural that homeowners would take notice,” Realtor.com chief economist Danielle Hale wrote.
Lawmakers float tax relief
Florida lawmakers are floating proposals to ease taxpayers’ financial burdens when it comes to property taxes.
As reported by Kiplinger, Florida voters approved an amendment during the 2024 elections that would tie the homestead exemption to inflation. That means, if inflation goes up, so does your tax break.
Florida Senate Banking and Insurance Chairman Blaise Ingoglia (R-Spring Hill) proposed a 15-to 20-year tax freeze for homes affected by natural disasters. The lawmaker also introduced a bill that would lower insurance premiums only if homeowners have made improvements to real property to mitigate its susceptibility to flood damage.
In response to DeSantis’ pitch to eliminate property taxes in Florida, state lawmakers have also commissioned a study on the elimination of the tax.
What’s next
There’s no doubt about it. Eliminating property taxes in Florida would be a tall order to accomplish.
The measure would leave the state with a $43 billion revenue gap that’s used to fund essential infrastructure services, education, and safety net programs like your police and firefighter departments.
As a state with no income tax, that largely relies on property taxes, economists say that the state would have to cut local budgets or significantly increase the state’s sales tax. The policy shift would be categorized as ‘regressive’ as those most affected would be low-to moderate-income households.
So, stay tuned to developments in the Sunshine state. Property taxes will continue to be a top discussion point in 2025.
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