Florida Legislature Advances Sweeping Property Tax Proposal with Major Implications for Commercial Property Owners, Homeowners and Local Governments

Earlier this week, the Florida Legislature approved a proposed constitutional amendment that could fundamentally reshape Florida’s property tax system beginning in 2027. The proposal will now go before Florida voters in the November 2026 election, where it must receive at least 60% approval to become law.

For commercial property owners and non-homestead taxpayers, the most significant component of the proposal is the reduction of the annual assessment cap for non-homestead property from 10% to 5%. If approved by voters, the lower cap would take effect January 1, 2027, and apply broadly to commercial real estate, investment property, and most non-homestead residential property.

Florida residents who have lived in the State for more than five years would see a substantial increase in the homestead exemption for non-school taxes. For those taxpayers, the exemption would rise to $150,000 in 2027 and $250,000 in 2028. The exemption would increase thereafter based on an inflation index. Homeowners with fewer than five years of residence in the State would be entitled to the full exemption then existing when they have resided in the State for five years.

The proposed amendment would have a profound revenue impact on county and municipal governments, both by reducing the revenue that is currently available and by limiting the use of property tax revenues to public safety, education, infrastructure, natural resource and flood-control projects, debt service, public employee retirement obligations, and operations and administration.

A taxing authority currently assessing taxes at a rate below the legal maximum – 10 mils for county governments and 10 mils for municipal governments – could consider raising the millage rate to overcome a loss in revenue. If adopted by voters, the methodology for establishing a TRIMs notice is yet unclear.

Absent millage rate increases, these changes represent a major reduction in the local property tax base at a time when many local governments are already facing rising costs for infrastructure, public safety, insurance, personnel, and debt service. No official Revenue Estimating Conference analysis has yet been completed, but House tax staff estimated that the proposed constitutional amendment could reduce statewide local government revenues by more than $4.6 billion in Fiscal Year 2027-28 and more than $8.4 billion in Fiscal Year 2028-29. Those estimates may not fully capture the prospective impact of reducing the non-homestead assessment cap from 10% to 5%, particularly because unrealized future growth limitations are often treated differently from direct exemption changes in fiscal estimating.

For commercial property owners, a permanent reduction in the non-homestead assessment cap from 10% to 5% would change Florida assessment principles but, coupled with increased exemptions for homeowners, would increase pressure on local governments to increase tax burdens on commercial properties. In any event, the proposal could materially alter long-term tax planning, valuation strategy, and the importance of preserving favorable assessments through the appeal process as local governments seek alternative revenue sources.

Our office will continue monitoring developments as additional fiscal analyses, ballot materials, and implementation guidance become available.