Early voting is underway in Florida, and voters are being asked to consider a significant change to the state’s property tax structure. Amendment 3 promises tax cuts for homeowners, but its effects could extend beyond homeowners’ tax bills.

To understand why, it helps to look at the amendment through a systems lens: examining not just the immediate effects of a policy, but how those changes might ripple through local governments’ budgets and the housing market.

Background on Florida’s property tax structure

Currently, homeowners who claim their home as their primary residence receive a discount on property taxes. Instead of taxing the property on its full value, homeowners can take up to $51,400 off the value of their home and be taxed on a lower amount. For example, a home worth $351,400 would only be taxed on $300,000.

Amendment 3

Amendment 3 would increase the amount of money considered when calculating that discount. The exemption would rise to $150,000 in 2027 and $250,000 in 2028, with inflation adjustments afterward.

For example, in 2028 a $351,400 home would be taxed on $101,400 worth of value. The increased exemption would not apply to school district property taxes. The amendment also creates a pathway to potentially eliminate property taxes altogether.

All registered Florida voters can weigh in whether they own or rent. Read the full text of the amendment here.

The initial drop in the bucket: Lower taxes for homeowners, lower local revenue

The most immediate effect is straightforward: qualifying homeowners would pay less in property taxes. A homeowner in Orange County, whose home is worth $351,400 would save more than $1,000 a year in property taxes in 2027 and $2,200 in property taxes in 2028.

At the same time, local governments would collect less revenue. Estimates for 2027 and 2028 from Central Florida jurisdictions are included below.

Reduction in local government revenue, years 1 and 2

Ripple effects: Local government response

Under Florida law, local governments are required to submit a balanced budget each year. If property tax revenues decline, governments must replace that funding, reduce spending, or both.

This is where the water becomes murkier. No one knows exactly how local governments would respond to permanently lessened property tax revenues, but they must respond under state budgeting laws.

One possibility is shifting more of the tax burden to businesses and rental properties.

A recent analysis modeled what could happen if local governments recovered their lost revenue through higher taxes on rental properties. Under that scenario, a single-family rental property in Orange County could experience a tax hike of $780 per year.

The bigger picture

Amendment 3 illustrates how changing one part of a system can produce consequences throughout the rest. Lower property taxes could provide meaningful relief to current homeowners. But the same policy would change how governments distribute costs and provide services.

The result could be a paradox: a policy intended to improve housing affordability for existing homeowners might, under certain circumstances, make housing more expensive in the future.

The News Collaborative of Central Florida has launched a comprehensive, nonpartisan voter guide featuring information on the races and constitutional amendments on the ballot. Check it out to help you make informed decisions this election, here.

To receive updates on how data, policy, and partnership come together to make lasting change in the housing system, subscribe to our Housing Reframed e-newsletter here

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