Federal Legislation (Tax Changes in 2026)
| Tax Provision | Change for 2026 (Tax Year) |
| State and Local Tax (SALT) Deduction Cap | The maximum deduction for state and local taxes, including property taxes, is temporarily raised to $40,000 (up from $10,000) for taxpayers below a certain income level. This cap and the income thresholds will be adjusted for inflation annually. |
| Mortgage Interest Deduction (MID) | The deduction limit on mortgage debt is permanently set at $750,000 for new debt (or $375,000 for Married Filing Separately), preventing it from reverting to the higher $1 million cap that was scheduled to return. |
| Private Mortgage Insurance (PMI) Deduction | Private Mortgage Insurance (PMI) premiums associated with acquisition debt will be treated as deductible mortgage interest, starting in 2026. |
| Residential Energy Credits | The Residential Clean Energy Credit (e.g., for solar panels) and the Energy Efficient Home Improvement Credit are set to expire at the end of 2025. This means they will not be available for systems or improvements installed starting on January 1, 2026. |
State (FL) Legislation (Tax Changes in 2026)
The primary focus of Florida state tax legislation discussions leading into 2026 is comprehensive property tax reform for homeowners.
Here is a summary of the key legislative and policy discussions regarding Florida tax changes in 2026:
1. Property Tax Reform and Constitutional Amendments (Potential 2026 Ballot)
The Florida House of Representatives has formed a Select Committee on Property Taxes to develop proposals to reduce or eliminate property taxes for homeowners, an initiative strongly supported by Governor Ron DeSantis.
Key Proposals Under Consideration for Homeowners:
Eliminating Property Taxes: The most dramatic proposal is the complete elimination of property taxes, at least for homesteaded properties. This faces significant challenges as property taxes fund local services like schools, police, and fire rescue.
Increasing the Homestead Exemption: Proposals include substantially boosting the current homestead exemption (currently up to
$50,000 to $75,000) to a much higher amount, such as $500,000 for non-school property taxes. Changing the "Save Our Homes" Cap: One proposal (FL H0067) seeks to further reduce the maximum annual increase in a homestead property's assessed value from the current maximum of
3% (or the change in the Consumer Price Index, whichever is lower) to 1.5%. If passed by the legislature and voters, this change would take effect on January 1, 2027 Expanding "Save Our Homes" Portability: Proposals are considering increasing the amount of "Save Our Homes" (SOH) tax savings that homeowners can transfer from an old homestead to a new one when they move.
2. Offsetting Lost Revenue (The Replacement Debate)
A major hurdle for property tax reduction is how to replace the lost revenue, which currently totals tens of billions of dollars and is critical for local government funding.
No Tax Hike Pledge: Governor DeSantis has repeatedly stated he would oppose any plan that includes a net tax increase for Florida residents.
He has suggested a focus on non-residents to subsidize tax cuts. Proposals for New/Increased Taxes to Offset Loss (Controversial):
Sales Tax Hike: Some analysts, like the Florida Policy Institute, have suggested that replacing all property tax revenue with a sales tax would require the state's sales tax rate to nearly double to around
12%, which would be the highest in the nation. Other New Taxes: One legislative proposal to eliminate property taxes included a new
5% transaction fee on all real estate sales and a 5% "safety surcharge" on tourist-related items like hotel rooms, rental cars, and theme park tickets.
3. Other Tax Changes (Already Signed or Proposed)
While property tax reform dominates the 2026 outlook, other tax measures have been passed with 2026 effective dates or are under discussion:
Corporate Tax Definition: The definition of "corporation" in Florida's Income Tax Code is scheduled for an update, effective January 1, 2026, to clarify that charitable trusts are not considered corporations for state tax purposes.
Local Communications Services Tax (CST): A three-year moratorium that froze local CST (cell phone and TV taxes) rates is set to expire on January 1, 2026, which will require new legislation to either make the freeze permanent or allow local rates to be increased.
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