Florida homeowners are finally seeing their relief. In November, a majority of over 66% of voters approved Amendment 5, a new law that increases the homestead exemption for inflation. That is, homeowners can now exempt more from the taxable value of their homes each year if there is inflation.
This is good news for millions of state residents who are being burdened disproportionately by escalating tax assessments. New property tax record cards are now being sent out by some counties, indicating this change.
What is the homestead exemption?
If you live in and own a house in Florida, you may be eligible for the homestead exemption. The tax exemption allows you to reduce the taxable value of the home, which means you’ll pay less in property tax.
Here’s the catch:
- You have a $25,000 exemption from the home value that has been imposed upon it.
- If your home is valued at more than $50,000, you get an additional $25,000, though the second one is not used for school taxes.
- By how much your exemption can grow during a year is limited to 3% or the inflation rate, whichever is lower.
This exemption was provided in 2023 to some 4.3 million Florida families. That’s an $800 per year tax savings for homeowners.
What does amendment 5 do
Starting January 1, 2025, the level of the homestead exemption is automatically increased based on the Consumer Price Index (CPI)—one of the more widely recognized inflation measures.
Step 1: For example, if the inflation increases by 2%, your exemption for homestead also increases by that amount. If there is zero or minimal inflation, your exemption will not change.
Step 2: In tax year 2025, the exemption will be $50,722, and it will continue to change each year.
Who wins and who loses?
That sounds empty to homeowners, perhaps, but not everyone is smiling. Groups such as the Florida Policy Institute indicate the savings are small, maybe $20 in savings to every homeowner in five years, and accomplish nothing for renters or small businesses.
They also estimate local governments will lose more than $400 million over the next five years. Counties such as Miami-Dade, Broward, and Palm Beach stand to be disproportionately affected.
Why are Florida property taxes so high?
Florida property taxes paid have risen nearly 60% in such cities as Jacksonville, Tampa, and Miami over the past five years. The reasons are:
- Record levels of new residents arrived in the state during the pandemic.
- Stratospheric housing prices in the housing bubble.
- Increased costs for climate resilience and disaster recovery initiatives.
And because Florida has no state income tax, property taxes are used to pay for schools, police, and public works at the local level.
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Even with Amendment 5, Florida property taxes remain a behemoth issue. Gov. Ron DeSantis has considered phasing out property taxes altogether, though experts point out that would mean a whole lot of constitutional rewriting and isn’t on the horizon anytime soon.
While that option is still open, homeowners have other ways of cutting the tax bill on their homes—such as cutting back on home improvements, moving to lower-taxing counties, or being eligible for more exemptions.
Stay tuned as Florida’s 2025 budget and upcoming tax policy continue to shift.
