MW Florida is voting on whether to slash property taxes. Here's who it would benefit - and hurt.

Aarthi Swaminathan and Andrew Keshner

Amendment 3's passage could add momentum to other states' efforts to slash property taxes

Florida's Amendment 3 could save each homeowner an average of about $1,800 by 2028, according to a rough estimate from Realtor.com.

Cape Coral, Fla., homeowner Mike Steele expects to save at least $1,000 on his tax bill next year if his fellow Floridians vote to raise a key property-tax exemption for the first time in nearly two decades this November.

The savings would come at a crucial time. Surging grocery costs and $4-a-gallon gas prices where he lives have the 62-year-old mortgage-loan officer cutting back on day-to-day expenses.

Cutting property taxes now would be "taking money from the government and putting it in the homeowners' hands and allowing homeowners to spend it the way they want it to," Steele told MarketWatch.

Voters like Steele in the Sunshine State are weeks away from making a decision on a controversial constitutional amendment this Election Day. If passed, Amendment 3 would put much more of a home's value beyond the reach of cities and counties when they calculate property-tax bills. Under current rules, up to $50,000 of a home's value can be excluded when property taxes are calculated. That exemption under Amendment 3 would rise to $150,000 on Jan. 1, 2027 and $250,000 one year after that, then move higher with inflation years after.

The measure only applies to permanent Florida residents, and the exemption would only count for non-school taxes. Yet if a home's value was below the exemption level, they would owe no taxes to their county, city or special districts.

To pass, 60% of voters have to vote yes on Amendment 3.

Cheaper tax bills would come at a cost: Law enforcement and other public-safety agencies could lose almost $461 million in tax revenue over the next two fiscal years. Tax revenue for public hospitals could fall by $269 million, while money for roads and transportation could decline by nearly $173 million, according projections from the Florida Policy Institute, a left-leaning advocacy and research organization.

"Removing [the] tax burden from homeowners and shifting it to all Floridians who buy things is a regressive measure," Joel Berner, a senior economist at Realtor.com, told MarketWatch, meaning that the state could potentially make up its revenue shortfalls by increasing other fees or its sales tax.

(Realtor.com is operated by News Corp subsidiary Move Inc.; MarketWatch publisher Dow Jones is also a subsidiary of News Corp.)

"In a state without income tax, [the amendment] raises the question of where government revenue will come from," he added.

Florida is one of nine states without an income tax, including Texas, where property-tax costs are also a hot-button issue.

Even if "the measure could be a boon for homeowners ... someone will have to foot the bill for government services that property taxes currently fund," Berner said.

Republican Gov. Ron DeSantis, a driving force for the amendment, has said many local governments can manage with less. If the amendment passes, local governments would still be getting more property-tax revenue compared to pre-pandemic years, he has said. Rural and small counties could get state assistance, DeSantis has added.

Property taxes in Florida are catching up to the surge in home prices across the state during the pandemic. The average Florida single-family homeowner paid about $4,900 in property taxes last year. That's a 39% jump from 2020, when they paid $3,550, according to property-data company Attom.

The Florida vote comes as homeowners across the nation have expressed frustration over big jumps in their property taxes. Many feel their taxes are too high and deliver too little value in return, a 2024 poll showed - and many bills have only increased since then. So have efforts in some places to rein in property taxes.

"Property-tax reductions have been in the wind in a lot of places," said Jared Walczak, senior fellow at the Tax Foundation and a policy consultant on state tax issues. "The movement didn't necessarily get a start in Florida, but it really caught on in Florida."

Amendment 3's passage could add momentum to other states' efforts to slash property taxes, he said. "If it does fall short, that's also politically notable," Walczak told MarketWatch.

A handful of other states have ballot measures targeting the cost of property taxes. Tennessee voters, for example, will decide whether to bar the state from levying property taxes. The state hasn't collected a state property tax since 1949, according to the Chattanooga Times Free Press.

The way Florida votes on Amendment 3 will be the highest-profile test this election season of how far people are willing to go to slash their property taxes. MarketWatch spoke with economists, homeowners, and people across the real-estate industry, and tax experts about who the biggest winners and losers would be if Amendment 3 passes.

Biggest winners

Florida homeowners would be a clear winner in the short term.

DeSantis has challenged criticisms of Amendment 3 and called the higher exemption a win for the state.

If the amendment passes, "people have more money in their pocket. You are going to have a better economy locally because they are going to be able to breathe," he said at a late-August press conference. "They are going to be able to spend money. It's going to end up having a very positive effect going forward."

Homeowners in counties such as St. Lucie and Volusia - home to Daytona Beach, of racing fame - stand to gain the most from Amendment 3 when the exemption amount rises to $250,000 in 2028, according to an exclusive analysis by Realtor.com for MarketWatch. The analysis assumes that current property-tax rates continue, and uses current home values.

The median savings across Florida per homeowner could potentially be about $1,800 by 2028, the company said.

 
County       Estimated annual savings on property taxes by 2028 * 
St. Lucie    $3,180 
Volusia      $2,788 
Broward      $2,672 
Pinellas     $2,618 
DeSoto       $2,530 
Gulf         $2,492 
Palm Beach   $2,444 
Hernando     $2,428 
Holmes       $2,352 
             * If Amendment 3 passes 

Florida homeowner Steele estimated that if Amendment 3 passes, he could save $1,000 in property taxes next year, and $2,000 in 2028.

To be clear, people who move to Florida after Dec. 31, 2026 would get a smaller exemption; they would have to live in the state for five years before they get the full exemption.

Florida homeowners who have applied for the homestead exemption can estimate how much they would save under Amendment 3 on this website created by the state.

Amendment 3 could reduce the volatile spikes in property taxes that some homeowners experience, so "existing property owners are really going to benefit; it's more kind of a stabilization mechanism," Rod D'Entremont, a Naples, Fla.-based real-estate broker with Remax Hallmark Realty, told MarketWatch. The broker, who is also a homeowner, estimated that he could save about $617 in property taxes in 2027, and over $1,200 the following year if the ballot measure passes.

At the same time, he doesn't foresee much of an impact on the housing market: "I don't think it's going to spur sales very quickly," he added, because new homeowners don't immediately get the property-tax relief.

Florida Realtors, the state's real-estate trade association, announced its support for the proposed tax cuts in August.

Biggest losers

On the flip side, cutting property taxes could potentially result in a cutback in public services and higher rents.

Local governments might increase tax rates, charge higher fees, cut services - or all of the above.

Property-tax money is "the backbone" of local government revenue, according to researchers at S&P Global Ratings. After polling officials in 90 Florida cities and counties, researchers said the officials were already devising backup plans to put in effect if the amendment passes. Most were ready to handle the revenue shortfall by increasing fees, assessments and utility taxes, according to the note. They were also planning to cut expenses while deferring capital projects.

In St. Lucie County, for instance, Amendment 3 could result in a $24 million shortfall in funding for fire, rescue and emergency medical services, and a $23 million drop for law enforcement, according to the Florida Policy Institute's site.

Port St. Lucie city officials have said that the city would be "substantially affected" by the passage of Amendment 3, as it could erase a quarter of the city's general-fund revenue, meaning that basic municipal services would lose funding. City officials say they've already instituted hiring freezes, cut overtime spending and deferred capital projects, among other steps, to try to pre-emptively control costs.

Florida renters could face higher rents

Renters could also wind up paying more after landlords pass along rising costs, Berner said. The higher homestead exemption would not apply to rental properties, second homes or commercial properties.

DeSantis has rejected the argument that the amendment could lead to trickle-down rent hikes and noted that commercial properties would get a lower assessment cap from the amendment. This would constrain how fast their own property-tax bills grew.

Assuming local governments would raise tax rates and fees to make up for lost revenue, there could potentially be a $406 increase in property-tax bills on the average apartment unit in 2028, said Walczak.

A rented single-family home could face an increase of $1,100 in its local tax bill in 2028, Walczak found in an analysis. Walczak was commissioned by the Florida Housing Coalition, an affordable-housing organization, to analyze the impacts of Amendment 3 on renters.