A select committee of the Florida House of Representatives is evaluating a bold proposal that could dramatically transform the state’s fiscal foundation and housing market: the potential elimination of property taxes. If the measure advances, it may appear on the 2026 ballot as a constitutional amendment with far-reaching consequences for homeownership, public services, and Florida’s broader economy.
At first glance, the proposal is appealing. Lawmakers are reportedly considering several sweeping changes, including a $500,000 homestead exemption (and up to $1 million for senior residents), authorizing the Legislature to raise exemptions by statute, and capping property assessment increases at 15% over three years for both homestead and non-homestead properties. Eliminating property taxes altogether, however, would represent the ultimate reach.
As with any sweeping reform, the deeper implications warrant scrutiny.
Property taxes are a cornerstone of Florida’s public finance system. According to the Florida Policy Institute, they generate approximately 18% of county revenues, 17% of municipal revenues, and up to 60% of funding for public schools. Real estate, including land and permanent structures, comprises 94% of the state’s taxable base. Unlike more volatile revenue sources such as sales taxes, property taxes provide steady, predictable funding for essential services like education, emergency response, infrastructure, and community development, which underpin quality of life and economic resilience.
Eliminating this estimated $55 billion in annual revenue raises a fundamental question: what would take its place?
Reliance on increased sales taxes?
A leading alternative under discussion is a significant increase in the state sales tax. The Florida Policy Institute estimates that the current 6% rate may need to double to 12% to make up the difference, potentially making Florida’s sales tax the highest in the nation. While shifting the burden may seem straightforward, the impact would be regressive. Sales taxes disproportionately affect low- and middle-income households and are more susceptible to economic downturns, threatening the stability of funding for vital services. Moreover, Florida’s constitution restricts local governments’ ability to independently raise revenue, often requiring supermajority approval and thereby further limiting flexibility.
Proponents argue that an increased reliance on sales taxes would shift more of the tax burden to visitors. While that theory has surface appeal in a tourism-driven economy, the elasticity of demand remains uncertain. Higher costs may prompt tourists to shorten their stay, spend less, or consider alternate destinations, all of which would undercut the very revenues intended to replace property taxes.
From a real estate standpoint, the potential upside is clear. Eliminating property taxes could significantly lower the long-term cost of homeownership, especially for buyers relocating from high-tax states. Florida’s appeal could intensify, and sellers may benefit from increased demand and higher property values. For renters, however, it is unlikely that tax savings for landlords would be passed on, so they may face increased costs for goods and services from the higher sales tax, representing regressive effects on affordability.
These incentives emerge against a backdrop of rapid housing appreciation. Florida home prices have increased 64% over the past five years, while property taxes rose nearly 48%, according to U.S. News & World Report, citing data from Redfin and CoreLogic. Value gains, however, are now trimming.
Questions about governance
Beyond economics, the proposal raises important questions about governance. Property taxes are currently set at the local level, not by the state. While the Florida governor and legislature champion federalism (decentralizing national decision-making to provide more empowerment at the state level) and freedom from overarching Washington mandates, there appears to be little reluctance to override municipal decisions to consolidate power in Tallahassee. If the state becomes the primary collector of tax revenue, is it not reasonable that it would then dictate how and where those funds are spent, regardless of local priorities or historical precedent? Would counties be put in a position of competing for funds, with winners and losers determined by which local representatives have curried favor with the current state administration?
Florida is already considered one of the most tax-friendly states in the country. Eliminating property taxes could further enhance its attractiveness to domestic and international buyers, particularly retirees and second-home investors seeking lower carrying costs. Still, policies of such magnitude must be approached with caution. Real estate markets do not operate in a vacuum. The very qualities that make Florida appealing, such as strong schools, safe neighborhoods, and sound infrastructure, depend on stable, locally controlled funding. Without a viable, equitable replacement for property tax revenue, these community cornerstones could be at risk.
For Florida’s real estate industry, the proposal presents both opportunity and risk. Lower costs of ownership could energize the market, but only if the livability and services that support long-term value remain intact.
Ultimately, Florida’s future should be guided not by bold experiments but by smart, deliberate reform. Policymakers must balance innovation with fiscal responsibility and respect for all levels of government, ensuring any changes strengthen, rather than jeopardize, the state’s promise as a place to live, work, and invest.
Budge Huskey is chief executive officer of Premier Sotheby’s International Realty.
This article originally appeared on Sarasota Herald-Tribune: Proposal to eliminate property taxes presents both opportunity and risk | Opinion
Reporting by Budge Huskey / Sarasota Herald-Tribune
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