Florida Legislature’s 2025 Budget: Smaller Spending, Bigger Reserves

The Florida Legislature has passed a $115.1 billion state budget for FY 2025–26, signaling a shift toward fiscal restraint. The new budget is about $3.5 billion smaller than last year’s, making it one of the few times in recent history the state has reduced year-over-year spending. Leaders focused on reducing costs, building reserves, and cutting taxes while still funding key services.

Key Budget Reductions and Reserves

The budget trims over 1,700 vacant state jobs, mainly in health and human services, and limits new program growth. Teacher pay raises were capped at $100 million—far below recent years. Several of Governor DeSantis’ initiatives saw reduced or no new funding.

A major feature is a planned deposit of $1.5 billion into Florida’s Budget Stabilization Fund over two years. Lawmakers also propose amending the constitution to raise the cap on that fund from 10% to 25% of general revenue. They allocated $580 million to pay down state debt and instituted a $250 million annual debt reduction requirement.

$1.3 Billion in Tax Cuts

Florida lawmakers approved a $1.3 billion annual tax cut package, the largest recurring cut in state history. The centerpiece is the permanent elimination of Florida’s 2% business rent tax, saving companies $900 million annually. Other business tax cuts include the repeal of aviation fuel taxes and reductions in gaming-related taxes.

For consumers, the tax package makes Florida’s back-to-school sales tax holiday permanent and creates year-round sales tax exemptions for hurricane supplies, sunscreen, life jackets, and more. The Legislature also added a new “Freedom Summer” holiday for outdoor gear and sports supplies.

Despite discussions, lawmakers ultimately did not cut property taxes. Instead, they allocated $1 million to study potential reforms to the property tax system.

Historical Context and Fiscal Outlook

This budget marks a significant change in direction. Florida’s budget had grown over 25% from 2019 to 2024, but this year, lawmakers chose to scale back. The decision reflects concerns over future economic uncertainty and possible federal funding changes.

With a reduced budget, record tax relief, and growing reserves, legislative leaders say Florida is “living within its means.” While some criticize the tax cuts for favoring businesses, the Legislature framed them as tools to encourage growth and enforce long-term spending discipline.

Overall, the 2025 budget aims to stabilize Florida’s finances while continuing to invest in education, infrastructure, and emergency preparedness. It sets the stage for a more cautious fiscal path amid evolving economic conditions.