More than 2,500 struggling small businesses in Manhattan caught a big break Thursday when the City Council approved a bill exempting them from the dreaded Commercial Rent Tax.

The tax, introduced in the 1960s, imposes a 3.9 percent surcharge on rents above $250,000 paid by businesses south of 96th Street.

As rents increased over the years, so did tax collections — reaching $850 million a year — even as brick-and-mortar stores face fierce competition from Web-based retailers.

“Rents have gone through the roof — in some areas increasing by 300 or 400 percent,” said Councilman Dan Garodnick, who sponsored the bill.

“By not doing anything, New York City was actually increasing taxes on small businesses. Today, we’re correcting that.”

The bill, which passed unanimously and has the backing of Mayor de Blasio, will allow businesses that take in less than $5 million and pay less than $500,000 in rent a year to receive CRT exemptions.