Property tax represents the single largest revenue source for the City of Toronto, directly impacting homeowners, landlords, and business owners across the city. Whether you’re a first-time homebuyer, property manager or an experienced real estate investor, or a long-time Toronto resident, understanding how Toronto property tax works and what changes are on the horizon is essential for financial planning.
This comprehensive guide breaks down everything you need to know about Toronto property tax in 2025 and the significant changes anticipated for 2026.
How Toronto Property Tax Works
Toronto property tax is calculated by multiplying your property’s current value assessment (CVA) by several combined rates: the City tax rate, the City Building Fund levy, and the Education tax rate set by the province. The Municipal Property Assessment Corporation (MPAC), a provincial agency, determines property assessments.
The city maintains separate tax rates for different property classes including residential, multi-residential, commercial, industrial, pipeline, farmland, and managed forests. This classification system ensures that different types of properties contribute appropriately to municipal services.
The Assessment Freeze: Still Using 2016 Values
One of the most significant factors affecting Toronto property tax is that assessments remain frozen at January 1, 2016 values. The province postponed the planned 2020 assessment update due to the COVID-19 pandemic, and MPAC has confirmed that 2026 property taxes will continue using these 2016 valuations.
For many homeowners, this means your assessed value is substantially lower than your property’s current market value. While this might seem advantageous, it creates disparities across the city as different neighborhoods have appreciated at different rates since 2016.
2025 Toronto Property Tax Rates: What You’re Paying Now
Toronto property tax rates increased notably in 2025 to address ongoing budget pressures. Here’s what property owners are currently paying:
Residential Properties: The total rate for 2025 is 0.754087%, representing a 6.9% increase over 2024. This includes a 5.4% municipal tax increase plus the 1.5% City Building Fund levy.
Multi-Residential Properties: Traditional multi-residential buildings face a rate of 1.197305%, with approximately a 3.45% increase comprising a 2.7% tax increase plus the 0.75% City Building Fund contribution.
New Multi-Residential Properties: A newly introduced subclass offers the same rate as residential properties (0.754087%) for qualifying newly constructed rental buildings—a significant 15% reduction in municipal taxes that applies for 35 years. This incentive aims to encourage purpose-built rental housing construction.
Commercial Properties: Businesses pay 2.275478%, with a 2.7% increase. However, eligible small businesses benefit from a 15% reduction through the small-business subclass.
Industrial Properties: The industrial class saw the steepest increase at 5.4%, bringing rates to 2.384303%.
Key Programs and Features Affecting Your Toronto Property Tax
The City Building Fund Levy
Since 2020, Toronto has added a dedicated City Building Fund levy to property tax bills. From 2022 through 2025, this levy increased by 1.5% annually, appearing as a separate line item on your tax bill. These funds specifically support housing and transit capital projects across the city.
Small Business Tax Relief
Introduced in November 2021, the small-business subclass provides a 15% commercial tax rate reduction for eligible properties. To qualify, your property must meet specific criteria including location requirements, lot size restrictions (generally 7,500 square feet or less), current value assessment limits ($10,000 to $1 million city-wide, or up to $7 million in designated growth areas), and proper classification.
The city maintains a list of eligible properties on its open data portal, and businesses can verify their qualification status there.
Vacant Home Tax: Higher Rates and Strict Enforcement
Toronto’s Vacant Home Tax has become increasingly significant. For properties vacant during the 2024 taxation year, the rate increased to 3% of the property’s current value assessment—a substantial penalty designed to encourage homeowners to rent out or occupy their properties.
Property owners must declare their occupancy status annually by April 30. For 2024 vacant properties, taxes are due in three installments: September 15, October 15, and November 17, 2025. Late payments incur 1.25% monthly interest, and false declarations or failure to declare can result in fines up to $10,000.
Relief Programs for Seniors and Persons with Disabilities
Toronto offers critical support for low-income seniors and people with disabilities through property tax increase cancellation and deferral programs. In July 2025, the city expanded eligibility by increasing the household income threshold by 5% to $60,000.
The Property Tax Increase Cancellation Program applies to households with income at or below $60,000 and property assessments under $975,000. Applicants must be over 65 or between 60-64 and receiving the Guaranteed Income Supplement or disability benefits.
The Property Tax Increase Deferral Program allows eligible seniors (50+ receiving a pension) or persons with disabilities to defer tax increases if household income doesn’t exceed $60,000.
Both programs require the property to serve as the applicant’s principal residence and help seniors and disabled residents maintain homeownership despite rising property costs.
What’s Coming in 2026: Anticipated Changes to Toronto Property Tax
The Interim Levy: What to Expect Early in the Year
The City will issue 2026 interim tax bills in January, set at 50% of total 2025 taxes for all property classes. This interim levy generates approximately $3.053 billion for municipal purposes and $1.101 billion for education, ensuring cash flow while the final 2026 budget is developed.
Depending on your payment plan, interim bill due dates will be February 17, March 16, April 15, May 15, and June 15 for the 11-installment plan; March 2 for the two-installment plan; and March 2, April 1, and May 1 for regular or six-installment plans.
The $1.072 Billion Budget Gap Challenge
Toronto faces a projected 2026 funding gap of approximately $1.072 billion. To put this in perspective, each 1% property tax increase generates roughly $49 million in revenue. Closing the entire gap through property tax alone would require an increase of about 22%—a politically and economically unfeasible scenario.
Mayor Olivia Chow has indicated her intention to pursue a “leaner budget” while seeking additional funding from provincial and federal governments. The final 2026 tax increase will be determined during budget deliberations in early 2026, likely January or February.
Luxury Home Municipal Land Transfer Tax Increase
In December 2025, Mayor Chow proposed significant increases to the Municipal Land Transfer Tax (MLTT) for luxury properties, scheduled to take effect April 1, 2026, if approved. While this doesn’t change annual property taxes, it affects transaction costs when properties are sold.
The proposed progressive tax scale includes:
- 4.4% on the portion between $3 million and $4 million
- 5.45% on $4 million to $5 million
- 6.5% on $5 million to $10 million
- 7.55% on $10 million to $20 million
- 8.6% on amounts above $20 million
The mayor argues this targets the top 2% of buyers and shifts more revenue burden to those who can afford it. However, the Toronto Regional Real Estate Board and other critics warn that Toronto already has North America’s highest land transfer tax, and further increases could discourage sales and worsen housing affordability.
Assessment Values Remain Frozen
MPAC has confirmed that 2026 property taxes will continue using January 1, 2016 current values. Despite significant market appreciation since 2016, your tax calculation won’t reflect current market values unless your specific property has undergone changes like additions or renovations.
The provincial government has signaled that a new assessment could occur in the near future, potentially using 2020 or 2022 valuations. Such an update would create significant shifts in tax burden across the city as properties that have appreciated more rapidly since 2016 would see proportionally higher assessments.
Payment Options and Important Dates
Toronto issues two property tax bills annually—an interim and a final bill. Property owners not enrolled in pre-authorized payment plans have multiple installment options throughout the year.
Payment methods include online banking, telephone banking, in-person bank payments, pre-authorized withdrawals, or cheque. The city offers flexible pre-authorized plans with two, six, or eleven installments to help manage cash flow.
What Toronto Property Owners Should Watch in 2026
Budget Deliberations: Council will determine final 2026 property tax rates in early 2026. Watch for the Mayor’s proposed budget and any provincial or federal funding announcements that could reduce the need for significant tax increases.
Provincial Assessment Update: If the province implements a new MPAC reassessment using more recent valuations, many property owners could see substantial assessment-related tax changes, even if overall rates remain stable.
Luxury MLTT Implementation: If approved, higher Municipal Land Transfer Tax rates will apply to sales closing after April 1, 2026. Buyers of properties over $3 million should budget accordingly.
Vacant Home Tax Compliance: Property owners must declare 2025 occupancy status by April 30, 2026, with any owed Vacant Home Tax due in fall 2026.
Planning Ahead: Strategies for Toronto Property Owners
Understanding Toronto property tax trends helps you plan effectively. Consider these strategies:
- Budget conservatively for 2026, anticipating a property tax increase higher than recent years but likely well below the theoretical 22% needed to close the full budget gap
- Review your assessment and file a request for reconsideration with MPAC if you believe it’s inaccurate
- Explore relief programs if you’re a senior or person with disabilities on a fixed income
- Consider pre-authorized payment plans to spread tax payments across the year
- Stay informed about budget deliberations and vote in municipal elections to influence tax policy
Conclusion
Toronto property tax represents a significant annual expense for property owners, and understanding the current rates, available relief programs, and anticipated changes helps you make informed financial decisions. While 2025 saw notable increases across most property classes, the extent of 2026 changes remains uncertain pending budget deliberations.
The continuation of 2016 assessment values provides temporary relief compared to what current market-value assessments might bring, but creates inequities that a future provincial reassessment will eventually address. In the meantime, Toronto continues balancing the need for revenue to fund essential services with the financial pressures facing residents and businesses.
Stay informed about the budget process in early 2026, and don’t hesitate to participate in public consultations or contact your city councillor to voice your concerns about property tax policy.
