How does Amendment 1 affect tax payers?

Now that it's law, here's how Amendment 1 may affect your tax liability.

Last month, the people of Florida voted in overwhelming numbers to save nearly $10 billion in property taxes with the approval of Amendment 1. This tax relief is in addition to the $15 billion tax cut passed by the Florida Legislature in 2007. Together, they add up to almost $25 billion in propertytax cuts over five years for Florida homeowners and businesses.

As you know from my previous reports, I had pushed for even deeper, broader and fairer tax cuts than those included in Amendment 1. However, I joined Governor Crist in urging passage of the amendment because I believe that some tax reductions are better than none. I also hope that the landslide YES vote will help persuade Tallahassee politicians that voters have a strong appetite for even more tax relief.

Next week I will introduce legislation to take the next steps toward property tax reform. You can expect a detailed report about that legislation when it's filed in a few days. My purpose in writing today is to make certain you know what Amendment 1 does and how it may affect you.

In general, citizens will gain the freedom to purchase a new home without huge tax penalties. Rental home owners, second home owners and businesses will benefit from limits on future tax increases. The amendment contains two provisions that I have long advocated: increasing the homestead exemption and the ability for Florida families to take with them their Save Our Homes tax savings.

Specifically, the constitutional amendment:

Increases the homestead exemption for almost all homeowners, providing an average savings of about $240 annually. The new exemption applies fully to homesteads valued over $75,000, and partially for homesteads valued between $50,000 and $75,000. This new exemption does not apply to school taxes.

Allows portability: The Governor has heard from many Floridians that they feel trapped in their homes. Portability allows homeowners to transfer up to $500,000 of their Save Our Homes tax benefits from their current home to a newly purchased home within any Florida county. Portability applies to homes purchased in 2007 and later.

Provides an assessment cap of 10 percent for all properties not previously capped:

While homestead properties are already capped at three percent, now all other properties, including rental properties, second homes, and business properties, will be protected from huge tax increases. This new exemption does not apply to school taxes.

Creates a new $25,000 exemption for business property, including office furniture, computers, machinery and equipment. This provision effectively ends the "tangible personal property tax" for 1.1 million small businesses in our state, saving not only the tax but the cost of preparing the return.

Many observers believe the passage of Amendment 1 will help jump start Florida's housing market and make Florida even more business friendly. I believe Amendment 1 is not a destination but is a step in the right direction. Governor Crist deserves the lion's share of the credit for the passage of the amendment. He worked tirelessly to explain the amendment in town hall meetings, discussions with taxpayers, and through the media. I look forward to working closely with him to keep the pressure on for controls on taxing and spending at all levels of government.

I encourage you to please read the details below or visit the Department of Revenue's web site online at www.myflorida.com/dor for information about how to receive these new benefits.

Thank you for the privilege of speaking for you in the Senate. It means a great deal to me to have the benefit of your thinking on tax policy and any other state issue. Your suggestions, criticisms and guidance help me be a better senator.