Determining just how much money you owe the city can be a real pain in the neck. You get a piece of paper in the mail, take a gander at the final figure, and then try to figure out how they came up with that number.
This is the way that the city of Toronto taxes its citizens as of the present moment. We are specifically going to be dealing with the changes that will be implemented in 2026.
How Municipal Taxes Work in Toronto
If you own a house or a building in Canada, you have to pay a tax on it. This is a general rule applicable everywhere in the country. However, the municipal tax in toronto is used to pay for the things you see around you every day.
When you pay your tax on your house or your building, this money is directly used by the city. This means garbage collection, the police force, fire department, transit, parks, and even snow removal. Without this money, the city cannot function.
Every year, the city of toronto sends you a tax bill twice a year. You receive an interim tax bill at the beginning of the year and a final tax bill in the summer.
This money is not just sitting in a vault somewhere. Every single dollar is allocated through a budget process to run Toronto’s infrastructure. However, the amount you pay is not just a wild guess. It is based on how much your house is worth and the tax rate set by the city council.
The Formula: How Your Tax Bill is Calculated
People often ask how the city comes up with the exact number on their property tax bill. It is actually a specific math formula.
Your final property tax is calculated by multiplying the assessed value of your home by the combined property tax rates.
Let me break that down. The total tax rate you pay is made up of three different parts:
- The municipal tax rate. This covers the city’s operating budget.
- The education tax rate. The province of Ontario sets this rate, and it helps fund the public education system. You pay this regardless of whether you have kids in school.
- The city building fund.
So, if your home has an assessed value of $800,000, you multiply that by the total combined percentage of those three parts to determine your final property tax amount. You can use a property tax calculator on the city website to do the math for you.
The 2026 Budget: What’s Changing This Year?
Every year, city council debates the budget. And every year, taxes usually go up.
If you look back at 2025, you might remember some larger increases. For municipal taxes toronto 2026, the situation is slightly different. The city has proposed a combined residential property tax increase of 2.2 percent.
This means your overall bill for 2026 will be slightly higher than last year. This 2.2 percent is actually split into two parts. The base municipal operating increase is quite small, just 0.7 percent. The rest comes from a special levy.
Understanding the City Building Fund Levy
You’ll also notice on your bill, we have a line that shows the city building fund levy. This year, it’s adding 1.5 percent on its own.
It’s not a tax. It is a dedicated property tax. It means the money we collect in this category has to be used for certain purposes. First and foremost, it is used to support large-scale transit and housing projects.
We are growing as a city. We need more transit lines, and we need more affordable housing. A few years ago, we established the city building fund. It was designed to ensure we had money on hand for large-scale transit and housing projects. So, the next time you pay this portion of your bill, you are supporting the construction of new transit lines and affordable housing.
MPAC and the Value of Your Property
The most confusing part of how taxes work is the assessment. The city of Toronto does not decide what your house is worth. That job belongs to the Municipal Property Assessment Corporation.
Most people just call them MPAC.
MPAC is an independent agency in Ontario. Their job is to look at every single piece of property in the province and determine its value. They mail you a property assessment notice that states what they think your place is worth.
This number is the foundation of your tax bill. Your tax is based on the assessed value MPAC gives you.
Why We Still Use 2016 Assessed Values
Here is where things get weird.
Normally, property assessment happens every four years. They look at the current real estate market and adjust your assessment.
But that hasn’t happened in a long time.
If you look at your property tax account in 2026, the number MPAC uses is still based on the market value of your property as of January 1, 2016.
Yes, 2016.
The provincial government paused the valuation process a few years ago and just kept extending the delay. So the assessed value you see on your paperwork is not what your house would sell for today. It is what your house would have sold for a decade ago.
This actually protects homeowners from massive, sudden tax spikes. If they updated the market value today, the numbers would jump drastically. But for now, for 2026, we are still locked into that January 2016 date.
How to Pay Your Property Tax Bill
Paying your bills shouldn’t be stressful, but if you don’t make your payment on time, you’ll be charged a fee. That’s what the city of Toronto does.
Keep track of your schedule. As mentioned earlier, Toronto has a system of sending out two bills per year for its residents: one early in the year, which is the interim bill, and the final bill during the summer season. You can also check your balance online using the online property tax lookup tool, but you’ll need to have your assessment roll number ready.
Due Dates, Billing, and Pre-Authorized Programs
Property tax due dates are strictly enforced. The interim bill usually has payment installments due in February, March, and April. The final bill has due dates in the summer and early fall.
There are several ways to pay your property taxes:
- Through your financial institution. You just set up the city as a payee in your online banking app.
- The pre-authorized payment program. This is the easiest way. You sign an application, give the city your banking info, and they automatically withdraw the correct amount on the due dates. It is a set-it-and-forget-it system. There are options for monthly withdrawals or installment-based withdrawals.
- Through your mortgage. Your lender might pay your property taxes for you. They collect a portion of the tax with your monthly mortgage payment and then send the money to the city. If this applies to you, your bill will show that the payment is being handled by your mortgage company.
The city is also pushing for less paper. You can sign up for ebilling to receive your notices by email. If you move, make sure you contact the city to change your mailing address. Sending the bill to the wrong house does not excuse you from paying late penalties.
Relief Programs: Rebates, Water, and Solid Waste Relief
Not everyone will greet the increase in taxes with open arms, and the city understands that.
There are safety nets for those in need. Low-income seniors or the disabled may apply for a tax deferral or even cancellation of the increased property tax.
You do have to apply for the relief, however. It is not automatic.
There are rebates available as well. The city takes care of your water and your garbage bills. If you qualify for the tax relief, you may also qualify for the water rebate or the solid waste relief. The solid waste relief helps to offset the cost of your trash bins.
Commercial Properties and the Small Business Subclass
If you’re a business owner, things get a little more complex. Commercial properties have a higher tax rate than residential ones.
For a long time, small businesses occupying or owning commercial spaces have been complaining about how their tax rate is too high. This is why a small business property tax subclass has been introduced.
If a commercial property satisfies certain conditions, such as the size and assessed value of the property, it can enjoy a 15% discount on the municipal tax rate. This subclass is supposed to ensure that small businesses on main streets remain afloat. If you’re a small business owner or a small commercial building owner, it’s worth checking if you’re eligible for this discount.
Disagree with MPAC? The Appeal Process
Sometimes MPAC makes a mistake. Perhaps they have incorrectly recorded that you have a finished basement when you don’t, or perhaps they have incorrectly recorded the size of your lot.
If you think the market value of your house in 2016 is way off, you have the right to dispute this.
You cannot dispute the rate of property tax. Only the assessment of the property can be appealed.
The first step is to file a Request for Reconsideration. This is often shortened to RfR. This is filed with MPAC. It is free to file this appeal. You simply state your case for why MPAC got their facts wrong.
If MPAC reviews your RfR and still doesn’t change the value of your house, you can then file an appeal to the Assessment Review Board.
This is an independent body, and you present your case, MPAC presents theirs, and then they make a binding decision. There is a strict deadline for this. You have to file your notice of appeal by a certain date, which is March 31 of the current year.
You will want to make sure you have some solid evidence before you go before the Assessment Review Board. You will have to prove that the houses in your neighborhood have a lower assessment value than yours did in 2016.
Dealing with municipal taxes toronto can be a full-time job, but if you know how your tax bill is calculated, you’ll be able to avoid any nasty surprises. Make sure to take advantage of the payment program options, find out if you qualify for solid waste relief, and make sure to always open your mail from the city.