I still remember the feeling when I opened my property tax bill earlier this year. You know the one. You grab the envelope from the City of Toronto, take a sip of coffee, and hope for the best. But when I saw the numbers for 2025, I honestly nearly choked on my drink.
If you’re a homeowner in Toronto, you’ve had a rough couple of years. First, we got hit with that historic increase of 9.5 per cent in 2024. It was a shock to the system. Then, just when we thought the dust had settled, Mayor Olivia Chow and the City Council approved another significant hike for 2025.
Specifically, a 6.9 per cent increase.
Now, as we sit here in late December 2025, staring down the barrel of a new budget cycle for 2026, everyone is asking the same question: Is it going to happen again?
The cost of living in this city feels like it’s spiralling. From groceries to the Land Transfer Tax if you dare to move into a new property, everything costs more. But property taxes hit differently because they are unavoidable. Whether you own a semi-detached in the Annex, a condo in Scarborough, or a multi-residential building, the city always comes to collect.
In this guide, I’m going to break it all down. No fancy jargon, no “bureaucratic speak.” Just the facts, the math, and a little bit of honest speculation about what Budget Chief Shelley Carroll and the Budget Committee might be cooking up for 2026.
The “Sticker Shock”: Analyzing the 2025 Property Tax Increase (6.9%)
Let’s start with the number that defined this year: 6.9.
If you watched the news on CBC or followed the budget process, you kept hearing “6.9 per cent.” But if you actually looked closely at your bill, or listened to the debates at City Hall, you realized that number is actually a frankenstein monster of two different things stitched together.
The city didn’t just raise the tax rate by 6.9%. That would be too simple, right?
Breaking Down the Math: Base Tax vs. City Building Levy
Here is how they actually got to that number. The City of Toronto splits your tax increase into two buckets: the General Property Tax (which pays for garbage, police, libraries, etc.) and the City Building Fund.
For 2025, the proposal that Council approved looked like this:
| Component | Increase Percentage | What it Pays For |
|---|---|---|
| Operating Budget (Base Tax) | 5.4% | Daily services: TTC, Police, Fire, Parks, Snow clearing. |
| City Building Fund (Levy) | 1.5% | Capital projects: Building transit lines and affordable housing. |
| TOTAL HIKE | 6.9% | The number on your bill. |
See that 1.5 per cent? That’s the City Building Levy. It was introduced years ago (during the John Tory era) as a dedicated fund. It increases by 1.5 per cent annually for residential properties. It’s supposed to be “dedicated,” meaning they can’t use it to fix a budget shortfall in the operating budget—it has to go to building stuff.
But for you and me, the taxpayer, it doesn’t matter which pocket the property tax rate comes from. It all adds up to a 6.9 per cent property tax increase.
Why 6.9%? Mayor Olivia Chow’s Budget Explained
Why did Mayor Olivia Chow push for this?
Honestly? The city is broke.
When Mayor Olivia took office, she inherited a financial mess that had been papered over for years. We had a shortfall of over 1 billion dollars. The pandemic drained the reserves (especially the TTC ridership crash), and the cost of everything went up.
Mayor Olivia Chow’s proposed budget for 2025 was built on the idea that we needed to stop using “band-aid solutions.” She argued that a 5.4 per cent base hike was necessary just to keep the lights on and prevent massive service cuts.
There was a lot of drama at City Hall. Councillor Brad Bradford and others argued that people couldn’t afford it. James Pasternak raised concerns about the impact on businesses. But in the end, the math won. The city argued that without this cash, we’d have to close libraries or let the subway rot.
Historical Context: The 2024 “Mega Hike” (9.5%) and How We Got Here
To really understand why people are so angry about 6.9 per cent in 2025, you have to look back at 2024.
That was the year of the 9.5 per cent hike. It was historic. It was the largest single-year increase since amalgamation.
For over a decade, property taxes in Toronto were kept artificially low—often below the rate of inflation. Politicians campaigned on “keeping taxes low,” especially for those in the condo subclass. It sounded great at the time. I loved it. You loved it. But it meant that the city wasn’t bringing in enough money from taxation to maintain its aging infrastructure.
The increase of 9.5 per cent in 2024 was basically the city playing catch-up. It was painful. It felt like getting hit with a decade of increases all at once.
So when 2025 rolled around and they asked for another 6.9 per cent, Torontonians felt like they were being kicked while they were down.
Looking Ahead: The 2026 Budget Outlook
Okay, enough looking back. It’s December 29, 2025. The holidays are here, but they may impact the city’s budget for 2023. But for the folks at City Hall, budget season is just beginning.
What is going to happen in 2026?
Will Taxes Go Up Again in 2026?
I wish I could tell you that taxes will go down. But let’s be real—property taxes almost never go down. The question is: How much will they go up?
Shelley Carroll, the Budget Chief, has been dropping hints lately. After the back-to-back hits of 9.5% and 6.9%, there is immense political pressure to deliver a “leaner” budget for 2026, considering affordability for residents.
The tone coming from the Budget Committee suggests they know they can’t ask homeowners for another 7-9% hike without causing a revolt. However, the City Building Fund levy of 1.5 per cent is likely baked in. That happens automatically unless Council votes to stop it (which is unlikely).
So, even if the “base” tax freezes (highly unlikely), you are likely starting at a 1.5 per cent increase right out of the gate.
The $1 Billion Shortfall and the Province
The wildcard for 2026 is the Provincial and Federal government.
Toronto still has a structural deficit. The New Deal with Ontario helped, but it didn’t solve everything. The city is spending hundreds of millions on refugee shelters—a cost that Mayor Olivia Chow argues should be federal.
If the feds or the province don’t cough up more cash to close that gap, the shortfall has to be covered by us, the property owners, particularly those with condos.
My prediction? We might see a proposal for 2026 that is lower than the last two years—maybe in the 4% to 5% range total. But keep an eye on CBC News in January. That’s when the first numbers usually leak.
Residential vs. Multi-Residential vs. Commercial Rates
One thing that confuses people is that not everyone pays the same rate.
If you own a house or a condo, you pay the Residential rate. But if you own an apartment building, you fall under Multi-Residential.
The Multi-Residential Shift
In 2025, while homeowners faced a 6.9 per cent combined hike, multi-residential properties had a slightly different deal determined by the municipal property guidelines.
The city has a policy to try and reduce the tax ratio for multi-residential buildings to encourage affordable rents (or at least, stop them from rising so fast). For 2025, the target increase for multi-residential was capped lower than the residential rate in strictly percentage terms regarding the base rate, though the levies still apply.
There is also a new class called New Multi-Residential. If you are a developer building new rental apartments, the city gives you a break to encourage supply. This is crucial because we have a housing crisis.
Commercial and Industrial
For commercial and industrial properties, the increases were capped differently to protect small businesses from the property tax hike, but they still pay a much higher rate relative to value than homeowners do.
How to Calculate Your Bill (The MPAC Factor)
This is the part that trips everyone up.
“My house is worth $1.5 million,” you say. “But my tax bill is based on a value of $900,000. Why?”
Thank the Municipal Property Assessment Corporation (MPAC).
MPAC determines the assessment value of your home. But here is the crazy part: As of late 2025, Ontario has still not done a province-wide reassessment in years, impacting affordability for many. Most property taxes are still calculated based on the value of your home way back in 2016 (phased in).
This is why your assessment value looks so low compared to what you could sell your house for on MLS today.
The Formula
Your bill is calculated like this, taking into account the new property assessment.
(MPAC Assessed Value) x (Total Tax Rate) = Your Annual Property Taxes, which may increase due to the proposed 2025 changes.
The Tax Rate is a tiny percentage. For example, if the residential rate is approx 0.6% (rough estimate including levies/education), and your home is assessed at $800,000:
$800,000 x 0.006 = $4,800.
If the City Council passes a 6.9 per cent property tax increase, the rate goes up. Your assessed value usually stays the same (until MPAC finally does a reassessment, which creates a whole new set of winners and losers).
Where Does the Money Go?
When you cut that cheque, what are you actually buying?
- Police & Emergency Services: A huge chunk.
- TTC: Keeping the subways and buses running.
- Debt Servicing: Paying off the credit card for past projects.
- City Building Fund: This is that 1.5 per cent levy. It goes directly to capital projects like the Scarborough Subway Extension or housing repairs. It’s a “building fund” quite literally.
Relief Programs and Deferrals
I know a lot of seniors who are house-rich but cash-poor. A 6.9 per cent hike on a fixed pension is devastating.
Thankfully, the city has Tax Relief programs.
Help for Seniors and Persons with Disabilities
If you are a low-income senior or a person with a disability, you might be eligible for a cancellation or a deferral of your tax increase.
Eligibility usually depends on your household income. If you qualify, the city might exempt the increase portion of your property tax bill. So, if your tax went up $300 this year, they might waive that $300, so you pay the same as last year.
There are also deferral programs where you can put off paying the taxes until you sell the house. It’s not free money—it’s a loan effectively—but it keeps you in your home.
You usually have to apply by a deadline (often August or October). Check the city website or call 311. Don’t let pride stop you from applying for an exemption from the property tax hike. This is your money.
Conclusion: Buckle Up for 2026
So, where does that leave us?
The 2025 increase of 6.9 per cent is done. It’s law. The bills are paid (or the installments are coming out of your bank account right now).
The focus now shifts to 2026.
Mayor Olivia Chow and Shelley Carroll have a tough job. They need to fix a broken city budget without breaking the backs of taxpayers. The days of inflation-level increases are probably gone for a while. We are in an era of catch-up as the city’s budget struggles to meet rising property values.
My advice? Stay informed about any proposed changes to the property tax rate that could affect your finances. Watch the public consultations in January 2026. If you are angry, show up. If you are worried, write to your Councillor. Whether it’s Brad Bradford, James Pasternak, or whoever represents your ward—they need to hear from you about the proposed 2025 property tax hike.
Because if there is one thing I know about Toronto City Council, it’s that the squeaky wheel gets the grease. Or, in this case, maybe a slightly lower tax hike.
Stay tuned. Budget season is coming.
Quick Reference: 2025 Tax Hike Cheat Sheet
| Category | Rate Increase | Notes |
|---|---|---|
| Residential | 6.9% | 5.4% Base + 1.5% Building Levy |
| Multi-Residential | 3.45% (Approx) | Lower base rate increase to protect tenants. |
| Commercial | 3.45% (Approx) | Half the rate of residential for the base portion. |
| Industrial | 6.9% | Matches residential increase. |
(Note: Rates are approximate totals including levies based on the 2025 approved budget structure).
FAQ: Common Questions
Q: Did Olivia Chow raise taxes by 16.5%? A: No. There was a scary number floating around early in 2024 warning of a 16.5% hike if the feds didn’t help. That didn’t happen. The final number for 2024 was 9.5 per cent.
Q: Why is my bill higher than the 6.9% increase? A: Did you do renovations? Did your assessment value change? Or did the cap on your property expire? Sometimes individual circumstances make your specific bill rise more than the average rate.
Q: Can I appeal my property tax? A: You can appeal your assessment value via MPAC (Request for Reconsideration). You cannot appeal the property tax rate itself, but you can question the assessed property value. If MPAC agrees your house is valued too high, your taxes will go down.
Q: When will we know the 2026 rate? A: The Budget Committee typically launches the budget in January, and Council votes on it by mid-February. By March 2026, we will know the damage.