Impact of the proposed Real Estate tax reduction

the amendment can reduce your federal itemized deduction for state and local taxes (SALT), because you can only deduct what you actually pay in property taxes. And if local governments replace lost revenue with fees instead of taxes, those fees are not deductible at all.

Here’s the full picture, clearly laid out.

🟦 1. Your federal SALT deduction goes down if your property taxes go down

The IRS allows you to deduct up to $10,000 in state and local taxes (SALT), including:

• Property taxes

• State income taxes (not applicable in Florida)

• Local income taxes (not applicable)

• Certain sales taxes (if itemizing)

If the amendment wipes out most of your non‑school property taxes, then:

• Your property‑tax bill shrinks

• Your SALT deduction shrinks

• Your federal taxable income increases

• Your federal tax liability may increase slightly

This is especially relevant for homeowners who already itemize because of mortgage interest, charitable giving, or high property taxes.

🟦 2. Fees and assessments that replace property taxes are not deductible

This is the part most homeowners miss.

If cities and counties replace lost revenue with:

• Fire assessments

• Stormwater fees

• Solid‑waste fees

• Utility rate hikes

• Special assessments

• Franchise fees

• Local sales‑tax increases

None of these are deductible on your federal return.

So even if your escrowed property taxes drop, your total local burden may shift toward non‑deductible charges, reducing your ability to itemize.

🟦 3. If you currently hit the $10,000 SALT cap, the amendment may not change your deduction

If you already pay more than $10,000 in combined property + sales taxes, you’re already capped.In that case:

• Lower property taxes won’t reduce your deduction

• But higher fees still hit you out of pocket

• And those fees remain non‑deductible

So you don’t lose a deduction, but you also don’t gain one.

🟦 4. If you don’t hit the SALT cap, you may lose part of your deduction

Example:

• You currently pay $7,000 in property taxes

• After the amendment, you pay $3,000 (school taxes only)

• Your SALT deduction drops by $4,000

• Your taxable income increases by $4,000

• Your federal tax bill rises by roughly $480–$960 depending on bracket

Meanwhile, if the city adds $400 in new fees, those are not deductible, so your net cost rises.

🟦 5. Renters and condo owners lose indirectly

Renters don’t get a SALT deduction at all.If landlords face higher fees or non‑homestead taxes, they pass them through rent — with no deduction for the renter.

Condo associations may face higher assessments, also not deductible.

🟦 Bottom line

Yes — the amendment can reduce your federal tax deduction because it reduces your deductible property taxes and replaces them with non‑deductible fees.For many homeowners, especially those who itemize, the net effect is:

• Lower escrow

• Higher non‑deductible fees

• Smaller SALT deduction

• Slightly higher federal tax bill

• Less predictability overall