A new tax reform proposal in Florida is causing heated debate. The proposed bill, sponsored by state House Rep. Ryan Chamberlin, seeks to study whether the Sunshine State can eliminate property taxes.
Data show that property taxes have been rising across the country. Over the last few years, the average tax on a single-family home in the U.S. was just under $4,000. State and local taxes continue to be among the highest tax bills people pay in the U.S. But, as in many states, property taxes in Florida are a primary source of funding for essential local government services and infrastructure.
In a message on X, formerly Twitter, Chamberlin wrote about the tax proposal: "It's Time - there's a better way. No more property taxes!”
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Since Florida is a state without an income tax, eliminating property taxes would require alternative sources of revenue. That revenue would likely come from increased sales taxes. So, the proposal has generated some controversy.
Here’s what else you need to know.
Florida sales tax increase?
The bill, which essentially advocates for eliminating property taxes and replacing them with an expanded sales tax, passed its first committee vote in the Florida House. What will happen in the legislature going forward remains to be seen.
- A main concern with the proposal is that it could lead to a considerable increase in sales taxes in Florida.
- Opponents argue that shifting to higher taxes on goods and services could disproportionately affect certain consumers, particularly those with lower and middle incomes or who do not own property.
According to local reporting, some supporters believe abolishing Florida's property taxes could help promote affordable housing and increase property ownership. They contend that doing away with property tax would alleviate the financial burden on property owners and renters.
How much is Florida property tax?
Property taxes in Florida are determined by several factors, such as the county and city where the property is located and its assessed value. Due to the absence of a state income tax, Florida's property tax rates are generally considered moderate compared to other states.
- On average, property owners in Florida can expect to pay between about 0.8% and 2.0% of their property's assessed value annually in property taxes.
- Actual property tax bills vary widely depending on the location and assessed value of the home.
- Under Save Our Homes (SOH), a property tax cap amendment to Florida's constitution, homestead property assessments can’t increase more than 3% from the previous assessment period. (The cap for non-homestead properties is 10%.)
Meanwhile, as Kiplinger has reported, Florida's current average sales tax rate of 7.02% is relatively moderate compared to other states. However, a $1.3 billion Florida tax relief bill signed by Gov. Ron DeSantis last year extended many of Florida’s numerous sales tax holidays. A new Florida sales tax holiday, which took place in January of this year, was added. Fiscal concerns make it unclear whether the extended tax holidays will continue.
Tax in Florida: What happens next?
The topic of taxes, revenue, and economic policy is complicated in many states, not just Florida. If the study is approved by the legislature, it could provide information by next year, 2025, to guide Florida property tax reform. In the meantime, Floridians face other challenges with property, including skyrocketing home insurance costs and major insurers like AAA and Farmers restricting or withdrawing coverage in the state.
It's also important to note that although some states have considered getting rid of property taxes (a similar proposal, AxMiTax, is circulating in Michigan, where homeowners face the highest property tax increase in 28 years, at 5%), no state has done so.
