Toronto raised its residential property tax by about 2.2% for 2026, and it raised commercial and multi-residential rates by half as much. That’s the real story behind the “commercial tax break” headlines. The City did not cut commercial taxes. It asked office towers, shops and rental apartment buildings to absorb a smaller increase than houses and condos, and it kept a long-standing gap in place between the classes.
Council adopted the 2026 budget on February 10, 2026. The numbers below come from the City’s own budget release and its published tax rate page, and where a figure is our own arithmetic, we say so.
What the City decided for 2026
Two pieces make up the residential increase. The first is a 0.7% increase in the operating levy for residential and industrial properties. The second is a 1.5% City Building Fund levy, which the City dedicates to transit and housing. Together they add up to the combined 2.2% the City quotes.
The City puts that at about $91.53 a year for a home with the average assessed value of $692,140. That’s roughly $7.63 a month.
Multi-residential and commercial properties got half of each piece. Their operating levy rose 0.35%, and their City Building Fund levy rose 0.75%. Halving the increase is how Council has treated those classes in the budget, and it means a commercial bill grows more slowly in percentage terms than a residential one.
The budget also raised the small business property tax reduction by five percentage points, to a total of 20%. The City says it benefits more than 28,000 small businesses.
How a Toronto property tax bill is built
The formula is short. Your assessed value, set by the Municipal Property Assessment Corporation, is multiplied by the total tax rate for your property class. The City page says it plainly: estimated property tax equals assessed value times the total residential rate.
That total rate has three parts. There’s the City tax, the education tax that goes to the province’s school boards, and the City Building Fund rate. Only the first and third are set by Toronto Council. The education rate is set by the province.
Because the assessment stays fixed unless something changes on the property, a bigger bill from one year to the next usually comes from a rate change, not from a jump in what your home would sell for. The City publishes the rates each year, and the 2026 ones are in the list below.
The 2026 rates for each class
Here is what the City publishes for 2026, with each rate expressed as a percentage of assessed value.
- Residential: 0.605295% City, 0.153000% education, 0.009016% City Building Fund, 0.767311% in total
- Multi-residential: 1.047960% City, 0.153000% education, 0.007832% City Building Fund, 1.208792% in total
- Commercial: 1.411477% City, 0.880000% education, 0.010509% City Building Fund, 2.301986% in total
- Industrial: 1.514233% City, 0.880000% education, 0.022541% City Building Fund, 2.416774% in total
New multi-residential buildings get the residential rate, 0.767311%, and the City describes it as a 35-year incentive to build rental housing.
Notice how far apart the classes are. The commercial City rate is more than twice the residential one. Dividing the two gives a ratio of about 2.33, and multi-residential comes out near 1.73. Those ratios are our arithmetic on the published rates, not a figure the City states on that page. But they show why commercial owners see tax as a big cost even after a smaller increase.
A residential bill, worked out
Take a home assessed at exactly the city average, $692,140. Multiply by each rate.
City tax is $692,140 times 0.605295%, which is $4,189.49. Education tax at 0.153% is $1,058.97. The City Building Fund rate of 0.009016% adds $62.40. Add the three and you get $5,310.86, which matches the total rate of 0.767311% applied directly.
The City’s $91.53 figure is the year-over-year change, not the bill. So if your assessment is above or below the average, your own increase scales in proportion. A home assessed at $1,000,000 would see roughly 1.44 times the average change, since $1,000,000 is about 1.44 times $692,140. The property tax calculator does this scaling for you.
A commercial bill, worked out
Now a shop or small office assessed at $2,000,000. City tax at 1.411477% is $28,229.54. Education tax at 0.88% is $17,600.00. The City Building Fund rate of 0.010509% adds $210.18. The total comes to $46,039.72, which is 2.301986% of $2,000,000.
That’s about 8.7 times the tax on an average home, from a property worth 2.9 times as much. Rates explain the gap. Commercial properties pay far more per dollar of assessed value.
The small business reduction sits on top of this for eligible properties. The City says the total reduction is now 20%, but eligibility rules apply, so a business should check the City’s small business page before counting on it.
Why the commercial class gets half the increase
Toronto has a policy of moving commercial and multi-residential rates gradually, so the gap to residential doesn’t widen. The City’s budget report describes the choice for 2026 as raising those rates by one-half of the percentage increase applied to the residential class. It says this gives some relief to commercial and multi-residential properties compared with residential ones.
We did not find an official page that states Council’s motive in one sentence, so treat the halving as a described choice and the rest as the practical effect. A slower increase on the classes that already pay the highest rates keeps the gap from growing.
And one caution. The headline that Toronto “slashed” its commercial tax ratio doesn’t match what the City published. In effect the ratios held. Each class just grew at its own speed.
A rental apartment building, worked out
Say a 100-unit rental building is assessed at $30,000,000. In the multi-residential class, the total rate of 1.208792% gives $362,637.60 a year. That’s $3,626.38 per unit before any other costs.
A building that qualifies as new multi-residential pays the residential rate instead, 0.767311%. On the same assessment that’s $230,193.30, or $2,301.93 per unit. The difference of $132,444.30 a year shows why the City calls the lower rate an incentive for new rental supply. Whether a given building qualifies depends on City rules, so an owner should check with the City before assuming it.
The City also says a 15% property tax discount for new multi-residential properties continues, according to the budget material. We did not open the eligibility terms, so that figure is a reported one, not something we’ve tested on a building.
Capping and clawbacks for commercial and multi-residential
Commercial, industrial and multi-residential properties in Ontario are subject to tax capping. The rule limits how much a bill can rise in a year and pays for that limit by holding back part of any decrease. For 2026, the City adopted clawback rates of 41.251301% for commercial decreases and 48.000988% for multi-residential decreases.
In plain terms, if a commercial property’s tax would otherwise fall, it keeps 58.748699% of that decrease. The rest funds the cap on properties whose taxes would rise sharply. Multi-residential properties keep 51.999012% of a decrease.
This matters mostly to owners whose assessments moved a lot. Residential owners aren’t part of this system.
What it means for a homeowner or tenant
If you own a house or condo, plan for the roughly 2.2% increase on the City portion of your bill. Check your final tax bill for the exact amount, since it depends on your assessment and any changes to the education rate.
If you rent, your landlord’s property tax isn’t a direct add-on. The rental property calculator shows how owners think about tax as one line among many, and the annual guideline for rent increases is set separately. For 2026 that’s 2.1%.
Business tenants may feel commercial tax more directly, because many commercial leases pass property tax through to the tenant. The lease decides, not the City.
How to read your own bill
Your final tax bill lists the City portion and the education portion separately. Compare them with the rates above.
- Find your assessed value on the bill or your assessment notice.
- Multiply it by the rate for your class and check that the total matches the bill.
- Look at the City Building Fund line, which is the dedicated levy for transit and housing.
- Note any instalment dates, so a missed one doesn’t add penalty and interest.
If a total doesn’t match, call 311 or use the City’s property tax pages. Don’t guess.
What we could not confirm
Some claims that circulate about this budget have no support on City pages. We found nothing showing a commercial “ratio cut” or a specific dollar amount transferred from commercial owners to homeowners. If you see either claim, ask where it comes from. Related tools: the Land Transfer Tax calculator, plus all our real estate calculators.
Sources
- City of Toronto, 2026 Budget now final
- City of Toronto, Property tax rates and fees
- City of Toronto, 2026 Property Tax Clawback Rate Report
Common questions
How much did Toronto property tax go up in 2026?
Last reviewed: . Figures come from the official sources listed above. How we check the numbers and our editorial policy.