St. Augustine outlines potential impact of proposed Florida homestead exemption expansion

St. Augustine has released a fact sheet explaining how a constitutional amendment on November's ballot could cut the city's property tax revenue, as Florida voters prepare to decide whether to dramatically expand the homestead exemption that shields owner-occupied homes from a portion of local taxes.

The proposed amendment, which the Florida Legislature placed on the November 2026 general election ballot during a special session in June, would raise the homestead exemption from $50,000 to $150,000 for non-school property taxes beginning January 1, 2027. It would raise the exemption again to $250,000 on January 1, 2028, with annual inflation indexing starting in 2029. The measure also directs the Legislature to create a schedule for full elimination of homestead property taxes, with no deadline and no identified replacement revenue source. Passage requires 60 percent voter approval.

City Manager David Birchim said the FAQ is meant to help residents who vote in city limits understand where their property tax dollars go. "Our goal is to provide clear, factual information about the proposed amendment and its potential budgetary impact on City services and capital improvements," Birchim stated in the July 23 announcement.

What's happening

The constitutional amendment in question is CS/HJR 1F, approved by the Legislature in a June 2026 special session. Under current Florida law, homestead properties — primary residences owned and occupied by Florida residents — receive a $50,000 exemption from all property taxes, plus an additional $25,000 exemption that applies only to non-school levies. The proposed amendment would affect only the non-school portion, meaning city, county, and special-district taxes but not school-board levies.

The amendment proposes a three-stage expansion. First, the non-school homestead exemption would increase from $50,000 to $150,000 on January 1, 2027 — a $100,000 increase. Second, it would rise to $250,000 on January 1, 2028 — an additional $100,000 increase. Third, beginning in 2029, that $250,000 cap would be adjusted annually for inflation. Finally, the amendment would require the Legislature to develop a timeline for complete elimination of homestead property taxes, though it sets no deadline for that elimination and does not specify how local governments would replace the lost revenue.

The City of St. Augustine has prepared a FAQ document, available on the city's website, that details the potential budget implications for municipal services. The city directed residents to www.CityStAug.com/budget for additional budget information.

Impact on St. Augustine's budget and services

Property taxes are the largest single revenue source for most Florida municipalities, including St. Augustine. Cities rely on property tax revenue to fund police and fire departments, road maintenance, parks, stormwater systems, and capital projects such as infrastructure upgrades. The homestead exemption reduces the taxable value of owner-occupied homes, which in turn reduces the total property tax revenue a city collects from its residential base.

Under the proposed amendment, the immediate effect in 2027 would be a revenue reduction from homesteaded properties within St. Augustine's city limits. The city's FAQ is designed to quantify that reduction and explain which services or capital projects could be affected. Specific dollar figures for St. Augustine's projected revenue loss would be calculated based on the city's current millage rate, the number of homesteaded properties, and their assessed values — data that typically appear in the city's annual budget documents.

Florida cities set millage rates each September during budget hearings, and the total revenue generated depends on the taxable value of all property in the jurisdiction. When the taxable value of homesteaded properties drops due to a higher exemption, cities face a choice: raise the millage rate on all properties (homesteaded and non-homesteaded alike) to maintain the same total revenue, or accept a revenue reduction and cut spending. Raising the millage rate to offset the exemption increase effectively shifts the tax burden from homesteaded properties to non-homesteaded properties — primarily rental homes, commercial buildings, and vacant land — as well as to the portion of homestead value above the exemption cap.

St. Augustine's budget process involves public hearings where residents can comment on proposed millage rates and spending priorities. Those hearings typically occur in July and September each year, ahead of the October 1 start of the city's fiscal year. If the amendment passes in November 2026, the city would need to incorporate the new exemption level into its fiscal 2027 budget, which would be adopted in September 2027 for the fiscal year beginning October 1, 2027.

How homeowners and the real-estate market could be affected

For St. Augustine homeowners with homestead exemptions, the amendment would reduce their city and county property tax bills. A homesteaded property with a taxable value of $300,000, for example, currently receives a $50,000 exemption from non-school taxes; under the 2027 proposal, that exemption would rise to $150,000, cutting the taxable value subject to city and county millage by an additional $100,000. The actual dollar savings would depend on the combined city, county, and special-district millage rates applied to that value.

The phased increases — $150,000 in 2027, $250,000 in 2028 — mean homeowners would see two consecutive years of tax-bill reductions if the amendment passes, followed by annual inflation adjustments that would further raise the exemption amount over time. However, those individual savings come with a trade-off at the municipal level: if cities do not raise millage rates, the revenue gap must be closed through spending cuts, which could affect service levels and capital investment.

Non-homesteaded properties — second homes, rental properties, commercial real estate, and vacant land — would not benefit from the expanded exemption. If cities raise millage rates to offset the homestead revenue loss, those property owners would see their tax bills increase. This dynamic is a central consideration in property investment decisions: rental and commercial properties in Florida already carry a higher effective tax rate than owner-occupied homes due to the existing homestead exemption and Save Our Homes assessment cap, and the proposed amendment would widen that gap.

In St. Augustine, where tourism drives a significant rental and short-term vacation market, the differential tax treatment between homesteaded and non-homesteaded properties could influence investor calculations and rental pricing. The city's historic downtown and proximity to the beach make it a strong rental market, and property tax costs are a component of landlords' operating expenses.

Broader context for Northeast Florida municipalities

St. Augustine is the first local government in Northeast Florida to publicly release an FAQ or impact analysis on the proposed amendment, but the fiscal implications are similar across the region. Every city and county in Florida that levies property taxes would face the same revenue trade-offs if the amendment passes.

In St. Johns County, where St. Augustine is located, the county government would also see a reduction in property tax revenue from homesteaded properties. The county funds the sheriff's office, the jail, road maintenance outside city limits, libraries, and beach services, among other functions. Like the city, the county would need to decide whether to raise its millage rate or reduce spending. Because St. Johns County has been one of Florida's fastest-growing counties — adding thousands of new homesteaded properties each year — the interaction between growth and the exemption increase is complex: new rooftops add to the tax base, but a higher exemption per rooftop reduces the revenue yield from each home.

Other Northeast Florida cities — Jacksonville, Orange Park in Clay County, Fernandina Beach in Nassau County — would face the same calculus. Jacksonville, with its consolidated city-county government, would see the exemption apply to the city's general fund millage as well as the independent special district levies for services such as fire rescue. Smaller municipalities that rely heavily on property taxes for police or public works would be particularly sensitive to the revenue shift.

The amendment's provision mandating the Legislature to create a schedule for full elimination of homestead property taxes introduces long-term uncertainty for municipal planning. If homestead property taxes were fully eliminated with no replacement revenue, cities would need to rely on sales taxes, utility taxes, fees, and special assessments — revenue sources that are less stable or more regressive than property taxes. Florida law currently prohibits cities from levying income taxes, and new local sales taxes require voter approval.

What happens next

The constitutional amendment will appear on the November 4, 2026, general election ballot. Voters statewide will decide whether to approve it; a 60 percent supermajority is required for passage. Early voting in St. Johns County typically begins two weeks before Election Day, and absentee ballots are mailed in October. The St. Johns County Supervisor of Elections will publish the full ballot language and a financial impact statement prepared by the state in advance of the election.

If the amendment passes, the first increase to $150,000 would take effect on January 1, 2027, applying to the 2027 tax year. Property appraisers in each county would adjust homestead exemptions on the tax roll accordingly, and taxing authorities would see the revenue impact when they set millage rates in summer and fall 2027. The second increase to $250,000 would take effect January 1, 2028, and inflation indexing would begin with the 2029 tax year.

The City of St. Augustine's FAQ is available on the city's website at www.CityStAug.com/budget. Residents with questions about the amendment or the city's budget process can contact the city's communications office; Rachel Murphy, communications specialist, is the media contact at 904-788-3252.

St. Johns County's budget and millage rate information is available on the county's website, and the St. Johns County Supervisor of Elections posts voter guides and sample ballots at www.votesjc.gov. Public budget hearings for the city and county are advertised in the St. Augustine Record and on government websites, and residents can attend or submit written comments.

The amendment's passage or failure will have direct consequences for how St. Augustine and other Northeast Florida cities fund infrastructure, public safety, and quality-of-life services as the region continues to grow. For St. Augustine, a city with a tourism-dependent economy and a historic preservation mission that requires ongoing capital investment, the trade-off between individual tax relief and municipal revenue stability is the central question voters will weigh in November.