Florida Just Introduced A Property Tax COLA For Retirees – How This Boost Could Ease Housing Costs For Thousands

In a move likely to lighten the load for thousands of retirees in Florida, the state has introduced a new COLA to its property tax exemptions to help seniors cope with rising housing costs. 

Currently, eligible homeowners receive two $25,000 exemptions, reducing the taxable value of their primary residence by up to $50,000. With this amendment, the second $25,000 exemption will now grow yearly to mirror inflation – much like Social Security's COLA increase. 

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For retirees feeling the pinch of inflated grocery, health care and utility costs, this tweak could mean real savings that help make ends meet.

Beginning Jan. 1, 2025, Florida’s homestead exemption – a property tax break on primary homes – will include an inflation-linked increase. In effect, the state will adjust part of the exemption amount annually to keep up with inflation, much like Social Security annually receives a COLA boost. 

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By pegging this exemption to inflation, retirees will be protected against property tax increases, which can otherwise eat away at home equity and monthly budgets. The impact of such a policy can be huge. For example, the income limits for eligibility to exemptions rose 4.1% in 2024, widening the reach of the benefit and bringing more retirees under its umbrella. 

Supporters see the amendment as a lifeline, especially in a state like Florida, where retirees comprise a significant portion of the population. 

The passage of Amendment No. 5 was fueled in part by Florida's rapidly increasing housing costs. Housing prices in the state have shot up in recent years and property taxes that match these prices can quickly become untenable for those on fixed incomes.

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On the flip side, not all Florida residents stand to benefit. Property tax relief remains out of reach for landlords, for instance, who don't qualify for the exemption. Moreover, some experts fear that as property tax revenue dips, the financial burden might eventually be shifted to nonexempt residents.

Florida's homestead exemption only applies to primary residences, meaning a property must serve as a person's permanent home to qualify for this exemption. 

Amendment No. 5 includes a carve-out for schools, ensuring they won't see a dip in property tax revenue due to the new policy. However, all other local governments, such as fire departments and utilities, may need to make up for the shortfall in other ways.

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