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How would Florida replace revenue from property taxes if eliminated?
Executive summary
Eliminating property taxes on Florida homesteads would remove roughly $15–$18.5 billion from local county, city and special‑district budgets and shift a much larger share of total property tax burden because about 64% of property‑tax revenue now comes from non‑homestead properties while homesteads account for about 36% (preliminary 2025 data) [1] [2]. Policymakers floated several replacements — higher sales taxes, transfer taxes, state backstops, fee increases or phased transitions — but analysts warn those options are volatile, politically fraught, and would reshape who pays and how local services are funded [3] [4] [5].
1. What the numbers say: how big a hole would be left
Preliminary 2025 data and reporting show primary residences supply about 36% of Florida’s property‑tax revenue while non‑homestead properties (second homes, rentals, commercial) supply about 64% — so carving out homestead taxes would eliminate billions from county, municipal and school budgets; one estimate puts the direct hit to counties and school districts at roughly $7.8 billion each and a total statewide cost for homestead relief in the $15–$18.5 billion range depending on which local levies are eliminated [1] [2] [6].
2. The main replacement options legislators are discussing
Proposals in reporting and legal analyses include: (a) expanding state sales tax or raising the sales tax rate to backfill local losses (consumption tax) [5] [3]; (b) a real‑estate transfer tax on property sales targeted at high‑value transactions [3]; (c) shifting some local costs to statewide funding or creating state block grants to replace local property revenue [7]; and (d) increasing fees/assessments at the local level as stopgaps [8]. Each has tradeoffs in revenue stability, progressivity and political feasibility [3] [4].
3. Stability and equity tradeoffs: why replacement is hard
The Tax Foundation and other analysts emphasize that property taxes are unusually stable and geographically aligned with local spending; replacing them with statewide taxes would shift burdens across communities and reduce local accountability, while sales or transfer taxes are more volatile and can be regressive [4] [3]. Removing a reliable local base risks “wildly different rates” across jurisdictions or a need for a large state‑level redistribution to avoid service cuts [4].
4. Local governments’ practical responses already underway
Facing the prospect of lower property revenue, many Florida cities and counties have already begun raising targeted fees, special assessments and service charges to fund things like fire, stormwater and infrastructure — tools that can be narrower but come with restrictions and political pushback; some fees also cannot legally substitute for general fund needs [8]. Analysts note that expanding fees tends to shift costs onto residents who use specific services but doesn’t cleanly backfill general budget items like schools [8].
5. Political/legal constraints and constitutional limits
Florida’s state constitution currently limits local taxing authority and the state lacks a personal income tax, a fact repeatedly raised by commentators as a structural constraint on replacement options. Introducing a new state income tax is constitutionally and politically difficult, so options have concentrated on consumption taxes, transfer taxes, or state appropriations — each requiring legislative action or constitutional amendments and likely intense political debate [3] [5] [9].
6. Competing narratives: reformers vs. critics
Proponents (including some lawmakers and Governor‑aligned proposals) argue large homestead deductions or elimination will ease homeowner burdens and could be phased to reduce shocks; they favor expanding consumption taxes or state aid as replacements [6] [7]. Critics — think tanks, local officials and analysts — warn that the math doesn’t add up without substantial new taxes or service cuts, that sales/transfer taxes are cyclical, and that rural or low‑income communities could suffer if revenues shift [4] [9] [8].
7. Two practical scenarios policymakers have floated
Analysts and legal firms describe phased approaches: (A) phased elimination over a decade to give local governments time to adjust and (B) targeted relief (e.g., for seniors) to limit fiscal impact. Even phased plans would require the state to identify $15–20 billion in replacement revenue or force corresponding cuts or local fee increases [6] [3].
8. What reporters and fact‑checkers emphasize as essential context
PolitiFact, NBC and local reporting stress that while the headline claim that non‑homestead properties supply the majority of property tax revenue is accurate, it “leaves out complicating factors” — notably the scale of dollars tied to homesteads, the legal limits on local revenue tools, and the fiscal risks of shifting to less stable tax bases [1] [2] [4].
Limitations: available sources do not mention detailed legislative text or final voter ballot language for any fully enacted repeal as of these reports, and estimates vary by which local levies are included (not found in current reporting).