Florida Property-Tax Cut Could Raise Home Insurance Costs

By Grace Kim

Florida voters approved Amendment 3 on Tuesday, raising the property-tax exemption on a primary residence from $50,000 to $150,000 next year and to as much as $250,000 in 2028.

The measure, championed by Governor Ron DeSantis, narrowly cleared the 60% threshold required to amend Florida’s constitution. It excludes school taxes from the exemption. The vote came amid a broader national push to cut property taxes. Florida’s mean effective property-tax rate on owner-occupied homes ranks 27th among states, even as those taxes rise quickly.

What does Amendment 3 change?

The current $50,000 homestead exemption will rise to $150,000 next year and reach as much as $250,000 in 2028. The increase applies only to primary residences. The Tax Foundation said businesses, landlords and second-home owners do not receive it, though a separate provision limits annual increases in assessed values to 5%, down from 10%.

Florida Realtors, a trade association for real-estate agents, spent heavily to support the measure and promoted it as a way to ease housing costs. “This Election Day, Florida homeowners chose property-tax relief,” president Chuck Bonfiglio Jr. said after the vote. He said the measure could be implemented “without compromising the essential services our communities depend on.”

Florida TaxWatch, an independent, nonpartisan taxpayer research group, estimates the amendment will cost counties, cities and special districts tens of billions of dollars in lost revenue over its first five years. Unless officials find replacement money, local governments will need significant service cuts. Those services include fire departments, building-safety offices and other programs that protect homes and reduce losses.

For homeowners, Amendment 3 delivers relief; for local governments, the fiscal bill arrives first.

How could tax cuts feed into insurance premiums?

Florida homes already rank among the US’s most costly to insure because of exposure to hurricanes, floods and other natural hazards, which climate change compounds. That sets up a potential knock-on effect on premiums.

Jesse Keenan, a professor of sustainable real estate and urban planning at Tulane University, said: “You ostensibly are going to pay for living in a high-risk area, either as a taxpayer or as a ratepayer.” He added: “It’s just shifting the burden.”

Jeff Brandes, a former Republican state senator who opposed the initiative, used his Wednesday post on X to put responsibility on state leaders: “Florida passed Amendment 3. The governor and the Legislature own what comes next,” he said. “They have the responsibility to manage the fallout.”

Brandes cited Dunedin, a small city in Pinellas County, which is preparing contingency plans for fewer firefighters working each shift. Local fire response can determine whether a small fire causes limited damage or destroys a home, making municipal staffing relevant to insurers.

Taxpayer relief could reappear as a larger insurance bill if local fire protection weakens.

Who absorbs the new costs?

Keenan said tighter local budgets could also reduce resources for building inspectors, code enforcement and disaster mitigation. “This will greatly impair local governments’ ability to make investments in risk reduction,” he said.

Keenan and other observers say cities and counties may replace lost property-tax revenue with sales taxes, special assessments and fees. The Tax Foundation likewise concluded that Amendment 3 does not erase the cost of local services; it changes who pays. Renters could face higher rents if landlords pass those costs on.

Many insurers use ratings from the Insurance Services Office, a private insurance-data company owned by Verisk Analytics Inc., to assess fire risk. ISO reviews firefighter staffing, training, equipment, water supply and emergency communications, then gives communities a rating that insurers can use in underwriting.

Mark Friedlander, a spokesman for the Insurance Information Institute, an industry-funded research group, said: “A reduction in fire protection services in a community can lead to a lower ISO rating.” He added: “The ISO rating is among numerous risk factors property insurers use to underwrite homes in Florida and could potentially cause premiums to increase if the rating is downgraded.”

The governor’s office and the Florida Insurance Council, a trade group, did not respond to requests for comment. Localities say it is too soon to know how they will respond.

Cragin Mosteller, deputy executive director of the Florida Association of Counties, which opposed the measure, said counties will work with the governor, the Legislature and the state Taxation and Budget Reform Commission “to make the transition carefully and to protect the quality of life Floridians expect.”

Florida’s next budget decisions will test whether officials can preserve firefighting capacity without shifting more costs to insurers, landlords and renters.