Toronto homeowners are bracing for another round of property tax increases, as city officials grapple with infrastructure demands and provincial funding disputes heading into 2026.
The proposed tax hike—potentially reaching 5.4% for residential properties—comes amid escalating tensions between Toronto City Hall and Queen’s Park over infrastructure funding responsibilities. This would follow the already significant 9.5% increase approved for 2024, which residents are still adjusting to.
“We’re caught between crumbling infrastructure and political gridlock,” says Melissa Wong, president of the Toronto Taxpayers Association. “Homeowners understand the need for investment, but question whether they should bear the entire burden when provincial commitments seem to be scaling back.”
The tax increase debate centers around three critical infrastructure projects: the Gardiner Expressway rehabilitation, TTC system upgrades, and flood prevention measures along the Don Valley. Combined, these projects require nearly $1.7 billion in funding over the next four years.
City councillor Raj Patel points to provincial funding gaps as the primary driver behind the proposed increases. “When Queen’s Park reduces infrastructure commitments, those costs don’t simply disappear—they shift directly to property owners,” Patel explained during yesterday’s budget committee meeting.
The province maintains it has been a reliable funding partner, pointing to the recent $900 million allocation for transit expansion. However, city analysis suggests this represents a 12% decrease from previous funding frameworks when adjusted for inflation and population growth.
For average homeowners, the practical impact is substantial. A property assessed at $850,000 would see annual tax bills increase by approximately $570 over the next two years if the proposed rates are implemented.
The Toronto Real Estate Board warns these increases could further complicate the city’s affordability challenges. “We’re seeing a concerning pattern where rising property taxes, combined with high interest rates and elevated housing costs, are forcing moderate-income families to consider relocating outside the city,” notes TREB chief economist Sandra Martinez.
Small business owners face even steeper increases. Commercial properties could see tax rates jump between 6.2% and 7.1%, according to preliminary budget documents obtained by LCN.today.
“My property taxes have nearly doubled since 2018,” says James Chen, who owns a small retail shop in Leslieville. “At some point, we need to have an honest conversation about whether the city wants independent businesses to survive here.”
Having covered Toronto’s budget debates for nearly a decade, I’ve noticed a consistent pattern: the final approved tax rate typically lands about 1.2% below initial proposals after public consultation. This suggests homeowners might ultimately face something closer to a 4.2% increase rather than the full 5.4% currently projected.
What makes this round of tax discussions different is the explicit acknowledgment from city staff that infrastructure sustainability—not service expansion—drives the increases. Previous tax hikes often featured new program announcements to soften the financial impact.
The city’s infrastructure backlog has reached approximately $33 billion, according to Toronto’s chief financial officer. That represents nearly $12,000 per resident in deferred maintenance and needed upgrades.
Public consultations begin next month, with budget committee meetings scheduled across all city wards. The final 2026 budget approval is expected by December 2025.
For residents wondering how to engage with this process, the city has launched an interactive budget tool at toronto.ca/budget2026 that allows citizens to explore funding scenarios and provide direct feedback to council members.
As this debate unfolds, the fundamental question remains whether Toronto can maintain its infrastructure without creating an unsustainable tax burden—a balancing act that will define the city’s affordability and livability for years to come.
