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Florida Governor Ron DeSantis is evaluating the prospect of abolishing property taxes within the state, a move that has raised concerns among economists regarding its potential implications.
In his State of the Union address on March 4, DeSantis articulated his objection to what he considers unfair taxation, stating, “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, revenue generated from property taxes plays a vital role in funding local school systems, as well as infrastructure projects and public safety programs such as police, firefighters, and hospitals. This revenue source is particularly important, given that Florida operates without a state income tax.
Understanding Florida’s Financial Structure
Recent statistics reveal that property taxes account for approximately 18% of county revenue, 17% of municipal revenue, and a significant 50-60% of funding for school districts, highlighting the dependence of local governments on this financial stream, as noted by the Florida Policy Institute (FPI).
While lawmakers have considered measures like increasing the homestead exemption and capping tax increases, DeSantis’ proposal to completely eliminate property taxes marks a noteworthy shift.
Daryl Fairweather, chief economist at Redfin, raised a critical question on X, asking, “With no income tax, and no property tax, what’s even left?” This inquiry suggests that a substantial sales tax increase might emerge to compensate for the loss of property tax revenue, potentially leading to adverse economic effects.
The Implications of Abolishing Property Taxes
If Florida were to eliminate property taxes, local governments would face an urgent challenge to generate $43 billion—or approximately $2,015 per resident—to sustain educational and public services.
Presently, the state enforces a 6% general sales tax. Compared to other states, Florida’s sales tax is moderate, with California having the highest at 7.25%. Should property taxes be abolished, there could be significant repercussions for the tax structure.
According to the Florida Policy Institute, an increase of just one percentage point in the state sales tax would yield about $6.7 billion annually. To nearly match the current property tax revenue, Florida would need to elevate its sales tax to 12%, which would situate it as the highest in the nation at a time when economic stability is crucial.
Such a dramatic spike in sales tax could disproportionately affect low- to moderate-income families, particularly in a landscape impacted by rising consumer prices and supply chain challenges.
The State of Property Taxes in Florida
Many residents express frustration over escalating property taxes in Florida, which, on average, reached 1.14% in 2024—a 9.5% increase from the previous year and a staggering 47.5% rise since the onset of the pandemic. Home prices have also surged by 14.6% annually over the past five years, according to CoreLogic.
This increase has resulted in higher tax bills, with the average hitting $3,101 last year. While Florida’s average property tax rate is in line with the national average, specific counties have experienced even steeper hikes. For example, Broward County’s median property tax reached $4,469, reflecting a 56.8% increase since 2019, paralleled by nearly 60% growth in home values.
Miami-Dade County has followed a similar pattern, where property taxes averaged $4,396, a 49.5% increase linked to soaring home values.
Legislative Efforts for Tax Relief
As a response to concerns about property taxation, Florida lawmakers are exploring various measures aimed at alleviating the financial burden on homeowners.
During the 2024 elections, voters approved an amendment to tie the homestead exemption to inflation, thereby granting additional relief as economic conditions fluctuate. Moreover, Florida Senate Banking and Insurance Chairman Blaise Ingoglia proposed a plan for a tax freeze for homes impacted by natural disasters and introduced bills to lower insurance premiums contingent upon property improvements aimed at flood resilience.
Following DeSantis’ proposal, state lawmakers have initiated a study to analyze the viability of property tax elimination, reflecting the complexity of the issue.
What’s Next for Florida’s Tax Landscape
Ultimately, the proposition to eliminate property taxes in Florida presents substantial challenges. The anticipated $43 billion revenue deficit could disrupt crucial public services, and in a state that has no income tax, the pressure would shift towards increased sales taxes or local budget cuts.
Economists have voiced concerns that such a shift would disproportionately affect lower-income residents, potentially exacerbating inequality within the state’s tax structure. As discussions continue, property taxes are poised to remain at the forefront of legislative debates in Florida throughout 2025.
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