Florida voters will find Amendment 3 on their ballots this November. The ballot initiative would modify the state’s property tax system by increasing homestead exemptions and lowering assessment caps on non-homestead properties. Passage requires a 60% supermajority vote.

The Delray Beach Chamber’s mission is to advocate for the business interests of Delray Beach and provide tools for local businesses to thrive — and part of that mission is keeping our members informed on issues that affect their businesses and employees.

The Florida Chamber has outlined here how Amendment 3 will impact homeowners, business and commercial property, renters and rental properties, and local communities and government.

Potential Impact on Homeowners

Homeowners who file for a homestead exemption before the end of this year can expect lower property taxes, as the exemption rises from $50,000 to $150,000 in 2027, and to $250,000 in 2028.

In Palm Beach County, the actual savings for an average family will vary depending on the homesteaded value of their home, the taxing municipality, and the local millage rate. In Palm Beach County, the savings could range from $1,500 to $2,000 annually.

Homeowners can model their exact potential changes using online platforms like the Florida Property Tax Amendment Calculator to check real non-school millage rates.

New homeowners and newcomers to the state who have not filed for a homestead exemption by the end of the year will face a five-year waiting period before becoming eligible for the increased exemption.

Core Education Allocations Not Impacted

The proposed changes to homestead exemptions and property assessments involve non-school property taxes, while baseline property tax revenue for public school districts has specific considerations under the proposal. However, there is a potential for after-school programming and school security to be impacted.

Potential Impact on Local Government Services

Florida TaxWatch reports estimate the measure could create a Palm Beach County revenue shortfall of roughly $400 million in the first year and over $4 billion in the first five years. Statewide, that figure is $45.8 billion in the first five years.

A shortfall of this size could affect funding for emergency services, public parks, and the maintenance and improvement of public property, including roads.

To offset the loss, cities and municipalities may need to raise millage rates, which would reduce the net savings homeowners see from the expanded exemption, institute user fees for services like solid waste, fire and rescue, or shift the burden to businesses and rental properties.

Florida TaxWatch provides detailed information regarding the budget shortfall Florida faces. Visit https://floridataxwatch.org/research/florida-property-tax-resource-center for more information.

Erosion of Home Rule

Amendment 3, if passed, also has the potential to limit what counties and cities can spend their tax dollars on, eroding home rule.

This is because Amendment 3 specifies categories for which property-tax revenues may be spent, including public safety, infrastructure, natural resources, debt service, retirement obligations, and government operations, and would allow the legislature to prohibit additional local uses through general law.

Some of the services that could be impacted include arts and culture, nonprofit/community agency grants, youth and afterschool programs, senior programs, festivals and events, and recreational programs, to name a few.

Potential Impact on Businesses and Renters

Because commercial properties do not qualify for homestead exemptions, any shortfall could translate into higher property taxes for office buildings, apartment complexes, and office parks. Those increases could, in turn, drive up rents for tenants, including many renters and small businesses that lease their space.

This amendment reduces the annual cap on assessment increases for non-homestead properties, including businesses, from 10% to 5%.

The Wall Street Journal editorial board cautioned that “shrinking the tax base in this way will inevitably drive localities to shift the burden to other forms of property, including commercial real estate, apartment buildings and tangible personal property (e.g. business equipment).”

Our Recommendation

We encourage all members to carefully weigh the pros and cons of this proposed constitutional amendment and decide what’s right for your business, your family, your employees, and your community.