Ending property taxes would unevenly drain budgets, hit residential communities hardest

Eliminating homestead property taxes in Florida would trigger steep, uneven revenue losses for municipalities statewide, with smaller and residentially dependent cities facing the greatest fiscal strain, a new Florida League of Cities study found.

The analysis found that while statewide averages suggest a loss of roughly one-third of municipal property tax revenues, those figures mask wide regional, geographic and socioeconomic disparities. In many communities, particularly along Florida’s coastal and metropolitan corridors, the revenue hit would be far deeper and threaten the stability of local budgets that fund police, fire protection, infrastructure and other core services.

Median revenue losses across Florida’s eight regions range from about 24% to more than 46% under a full elimination of the homestead tax. Central East Florida would suffer the steepest median decline, followed closely by Central Florida and the Southeast. These regions tend to have high concentrations of homesteaded residential property, leaving cities especially vulnerable if that tax base disappears.

By contrast, parts of North Central Florida, the Panhandle and Southwest Florida show smaller median losses. Researchers attributed that relative resilience to more diversified property tax bases, including commercial and mixed-use development, and a somewhat greater reliance on state-shared revenues. But even in those areas, losses remain substantial.

Variation within regions is also striking. In some areas, the study found, individual municipalities could lose more than half — and in extreme cases, nearly all — of their property tax revenue. Smaller cities with narrow tax bases would be particularly exposed, raising concerns about their ability to maintain basic services without outside assistance.

Geographic mapping included in the report highlights clusters of high-impact municipalities along Florida’s coastal counties, including Miami-Dade, Broward, Palm Beach, Collier and Lee counties. Those areas combine high property values with large shares of homesteaded homes, meaning that removing homestead protections would produce sharp proportional declines in revenue.

Inland and Panhandle communities generally face smaller percentage losses, though many still lack the fiscal flexibility to absorb even modest declines.

The study also broke down impacts by population size, housing values and income levels. Small and mid-sized cities of up to 15,000 residents show some of the most unpredictable outcomes, with median losses approaching or exceeding 40% in certain population brackets.

Communities with higher median home values and higher household incomes experience the largest proportional losses, reflecting the cumulative effect of homestead exemptions and Save Our Homes caps over time.

Lower-income municipalities, meanwhile, tend to lose a smaller share of revenue but are often less able to compensate through reserves, fees or alternative revenue sources. That imbalance, the report warned, could widen disparities in fiscal capacity across Florida if reforms proceed without offsetting measures.

Researchers urged policymakers to consider equalization mechanisms, such as state revenue offsets or targeted flexibility, to prevent essential services from eroding unevenly across the state.

The study, published this week, comes as House lawmakers, with support from Speaker Daniel Perez, weigh proposals to eliminate or sharply expand Florida’s homestead exemption.

Gov. Ron DeSantis has called for similar action, as has CFO Blaise Ingoglia, while Senate President Ben Albritton has advocated for a more measured, studious approach to the issue, which he conceded last week is still being examined by his chamber.

The Florida League of Cities study, conducted by researchers at Wichita State University, comes months after DeSantis vetoed a $1 million earmark in Florida’s budget that would have funded a study on the potential impacts of eliminating property taxes. A Florida Policy Institute study released in February found that Florida would need to double its sales tax to 12% to offset the local revenue losses that ending property taxes would cause.