Item - 2026.CC38.1

The Chief Financial Officer and Treasurer recommends that:

2026 MUNICIPAL PROPERTY TAX RATES AND RELATED MATTERS

City Council adopt the 2026 tax ratios shown in Column II for each of the property classes set out below in Column I:

2. City Council elect to raise the tax rates as follows:

a. On the restricted property classes:

i. On the Commercial Property Classes, by one-half of the percentage tax rate increase on the residential (and new multi-residential, pipelines, farmlands, and managed forests) property class; and

b. On the unrestricted property classes:

i. On the Multi-Residential Property Classes, by one-half of the percentage tax rate increase on the residential (and new multi-residential, pipelines, farmlands, and managed forests) property class; and

ii. On the Industrial Property Classes, by the full tax rate increase on the residential (and new multi-residential, pipelines, farmlands, and managed forests) property class.

3. City Council adopt the following tax rates, subject to the 2026 Mayor's Proposed Budget being adopted as the City's 2026 Budget, and in the event City Council amends the 2026 Mayor's Proposed Budget so as to impact the following tax rates and such amendments are not subsequently vetoed by the Mayor, City Council direct the Chief Financial Officer and Treasurer to report to City Council with any necessary adjustments to the tax rates to reflect the final budget amendments for Council's consideration:

a. The tax rates set out below in Column IV, which will raise a general local municipal tax levy for 2026 of $6,174,269,194.00, inclusive of a 0.7 percent residential, new multi-residential, industrial, pipeline, farmlands and managed forest tax rate increase, and a 0.35 percent commercial and multi-residential tax rate increase; and

b. The additional tax rates set out below in Column V, which will raise an additional special general tax levy of $74,996,117.00 dedicated for priority transit and housing capital projects (the "City’s Building Fund levy").

4. City Council elect to have the subclasses set out in Column II for each of the property classes set out in Column I apply for the 2026 taxation year, and to apply the respective tax rate reductions set out in Column III below. 

5. City Council adopt the following property tax capping polices for the 2026 taxation year, consistent with the 2025 taxation year:

a. limit tax increases for the commercial, industrial, and multi-residential property classes by capping taxes at 10 percent of the preceding year’s annualized taxes, by opting to have subsection 292(1), paragraph 1, of the City of Toronto Act, 2006, apply for the 2026 taxation year;

b. continue to provide that the 10 percent cap on tax increases apply to any property within the commercial, industrial and multi-residential classes, regardless of whether the property had reached full Current Value Assessment taxation levels in a prior year, subject to the threshold adopted in Part c. below; and

c. for the purposes of subsection 292(1), paragraphs 3 and 4 of the City of Toronto Act, 2006, adopt a threshold limit of $500 to determine the taxes for municipal and school purposes, such that properties that are within $500 (plus or minus) of their full Current Value Assessment level of taxation in the current year are taxed at full Current Value Assessment taxation levels for the year, and are therefore excluded from capping/claw-back provisions for that year.

6. City Council determine that:

a. the instalment dates for the 2026 final tax bills be set as follows:

i. the regular instalment dates be July 2, August 4, and September 1 of 2026;

ii. for taxpayers who are enrolled in the monthly pre-authorized property tax payment program, the instalment dates be July 15, August 17, September 15, October 15, November 16 and December 15 of 2026; and

iii. For taxpayers who are enrolled in the two-installment program, the final instalment date be July 2, 2026; and

b. the collection of taxes for 2026, other than those levied under the interim levy By-law 1336-2025, be authorized.

PROPERTY TAX, WATER AND SOLID WASTE RELIEF PROGRAMS

7. Effective January 1, 2026, City Council amend the eligibility criteria for the Tax Deferral and Tax Cancellation programs, the Solid Waste Single Family Residential Low-Income Relief Program and the Water Rebate for Low-Income Seniors and Low-Income Disabled Persons, the Co-Operative Housing Grant program, comprised of the Co-Operative Housing Property Tax Grant Program, the Co-Operative Housing Solid Waste Grant Program and the Co-Operative Housing Water Grant Program, and amend, as may be required to give effect to Council’s decision, the City of Toronto Municipal Code Chapter 767, Taxation, Property Tax, Chapter 844, Waste Collection, Residential Properties, and Chapter 849, Water and Sewage Services and Utility Bill, and any other necessary Municipal Code Chapters, to increase the maximum household income for an eligible person to $62,000.00, and for each calendar year after 2026, effective January 1 of the year, to annually adjust the maximum household income for an eligible person in accordance with the Statistics Canada, All-Items Consumer Price Index by City, Annual Change – Toronto.

8. City Council approve the continuation of the previously approved interim water rebate for eligible low-income seniors and low-income persons with disabilities at a rate of $1.4589 per cubic metre, representing a 30 percent reduction from the Block 1 rate (paid on or before the due date).

9. City Council determine that the 2026 Non-Program Tax Account for Rebates to Charities in the Commercial and Industrial Property Classes be set in the amount of $7,274,452.00 to fund the mandatory 2026 property tax rebates to registered charities in the commercial and industrial property classes, which provision is to be funded, for a net impact on the 2026 operating budget of zero, by the following:

a. an additional tax rate of 0.005381 percent be levied as part of the general local municipal levy on the commercial class to raise a further additional local municipal tax levy of $6,771,766.00 to fund the total estimated rebates to registered charities for properties in the commercial class in 2026; and

b. an additional tax rate of 0.000996 percent be levied as part of the general local municipal levy on the industrial class to raise a further additional local municipal tax levy of $502,686.00 to fund the total estimated rebates to registered charities for properties in the industrial class in 2026.

2026 EDUCATION PROPERTY TAX RATES AND LEVY

10. City Council adopt the 2026 tax rates for school purposes, as shown in column II, which will generate an education tax levy on rateable properties for 2026 in the total amount of $2,213,525,317.00 in accordance with Ontario Regulation 400/98 as amended, prescribing such rates for the City of Toronto, of which $4,223,129.00 (0.2 percent of the total education levy) is to be retained by the City pursuant to Ontario Regulation 121/07:

USER FEES

11. City Council approve the 2026 fees and charges in Appendix 1 of the 2026 Mayor’s Proposed Budget, and amend City of Toronto Municipal Code Chapter 441, Fees and Charges, and any other necessary Municipal Code Chapter accordingly.

12. City Council direct that the water and wastewater consumption rates for metered and flat rate consumers and water and wastewater services fees in the amounts set out in Appendix 3 to the Mayor's Proposed Budget, which is consistent with the 2026 interim water and wastewater consumption rates for metered and flat rate consumers and water and wastewater services fees adopted by Council in Item 2025.EX28.9 at its meeting on December 16 and 17, 2025, are the final rates and fees for 2026.

13. City Council direct that the solid waste management service rates and fees in the amounts set out in Appendix 3 to the Mayor’s Proposed Budget, which is consistent with the 2026 interim rates adopted by Council in Item 2025.EX28.10 at its meeting on December 16 and 17, 2025, are the final rates and fees for 2026.

14. City Council delegate authority to the Chief Financial Officer and Treasurer to approve automatic annual inflationary adjustments to the fees and charges set out in Table 1 of Appendix A in this report, effective January 1 of each year, commencing in January of 2027, and amend City of Toronto Municipal Code Chapter 441, Fees and Charges accordingly.

OTHER

15. City Council approve the suspension of the 2024–2026 City of Toronto–Toronto Parking Authority Net Income Share Agreement, effective January 1, 2026, to enable all Toronto Parking Authority net revenues to be remitted to the City of Toronto, while a longer-term fiscal and governance review is underway, consistent with the Toronto Parking Authority Board decision (Agenda Item 2025.PA17.3).

16. City Council request the Toronto Parking Authority Board direct the President, Toronto Parking Authority, to consider applying an inflationary adjustment or modified rates for parking locations for 2026.

17. City Council authorize the Chief Financial Officer and Treasurer, in consultation with the General Managers and Division Heads, to accelerate the cash flows included in divisional 2026-2035 Capital Budgets and Plans as operationally required to enable implementation of the 2026 Mayor’s Proposed Budget, consistent with direction communicated in the 2026 Mayor’s Proposed Budget.

18. City Council direct the Chief Financial Officer and Treasurer to report back to Council in the annual Year-End Capital Variance report on accelerations of cash flows that were operationally required to enable the implementation of the 2026 Mayor’s Proposed Budget.

19. City Council direct the General Manager, Solid Waste Management Services to distribute all future waste collection schedules through a full standalone mailing.

20.   City Council direct the consolidation of major capital reserves through the transfer of the balance of the Scarborough Transit Reserve Fund in the amount of $332.996.00 million to the City Building Reserve Fund, while preserving funds for their intended purposes.

21. City Council amend the Toronto Municipal Code Chapters contained in Appendix C to this report to increase the maximum fine amount for offences to $100,000.00 and provide that a director or officer of a corporation who knowingly concurs in the contravention of the chapter by the corporation is guilty of an offence.

22. City Council direct that the amendments to Toronto Municipal Code Chapters, to give effect to City Council's decision in Recommendation 21, come into force on September 1, 2026.

23. City Council authorize the General Manager, Parks and Recreation to negotiate and execute an agreement with Park People to implement a citywide initiative to support and strengthen community-led park groups, with funding of up to $120,000.00 to be provided to and matched by Park People, for a term expiring on December 31, 2026, on terms and conditions satisfactory to the General Manager, Parks and Recreation and in a form satisfactory to the City Solicitor.

24. City Council direct the Executive Director, Environment, Climate and Forestry, and the Executive Director, Social Development, or their designates, to expand the existing Air Conditioner Pilot Program for Low-Income Seniors by renaming the program as the Air Conditioner Pilot Program for Low-Income and Vulnerable Residents and by authorizing the Executive Director, Environment, Climate and Forestry and Executive Director, Social Development, in consultation with the Medical Officer of Health, to expand eligibility criteria to include other low-income or vulnerable groups based on similar City programs, together with the following:

a. other program eligibility criteria;

b. collection of personal information for the purpose of determining eligibility;

c. administration of air conditioner benefits;

d. evaluation framework; and

e. the geographic equity component proposed on page 5 of the revised report (May 7, 2025) from the Executive Director, Environment, Climate and Forestry, and the Executive Director, Social Development, without limitation.

25. City Council authorize the Executive Director, Environment, Climate and Forestry and the Executive Director, Social Development, to accept donations for the purpose of the Air Conditioner Program for Low-Income and Vulnerable Residents.

26. City Council authorize the City Manager to reallocate FIFA related funding included in Division and Agency 2026 Operating and Capital Budgets within the FIFA hosting costs envelope of $380 million, as required to address emerging cost pressures, operational requirements, delivery risks, and schedule constraints.

27. City Council direct the City Manager to report back to Council on FIFA-related funding reallocations for which the City Manager exercised the authority granted by City Council under Recommendation 26.

28. City Council direct the City Manager, the Executive Director, FIFA World Cup 2026 Toronto Secretariat, and the Chief Procurement Officer:

a. to exercise their authorities currently delegated under Municipal Code Chapter 71, Financial Control, and Municipal Code Chapter 195, Procurement, to make commitments, awards, amendments, and to authorize over-expenditures for procurements required for the delivery of the FIFA World Cup 2026 that are not included in the Council approved Procurement Plan, and to report to every meeting of the FIFA World Cup 2026 Subcommittee on all such commitments, awards, amendments, and over-expenditures made during the previous reporting cycle.

b. for commitments, awards, amendments, and over-expenditures for procurements under Recommendation 28 (a), City Council rescind any requirement for the Chief Procurement Officer to exercise their discretion to bring forward recommendations to Executive Committee, via the FIFA World Cup 2026 Subcommittee.

29. City Council delegate authority to the City Manager or their delegate to approve over-expenditures up to $1,000,000 in addition to the original amount of the commitment, and to execute any necessary purchase order amendments required in compliance with Chapter 195, Procurement, required for the delivery of the FIFA World Cup 2026, provided that:

a. City Council has provided funds in the Operating or Capital budgets for that purpose, or donated funds are provided in accordance with Chapter 71, Financial Control;

b. sufficient funds remain within the Capital project or program’s budget or within the relevant Operating budget; and

c. the City Manager and the Chief Procurement Officer report, for information, on the use of this authorization to each meeting of the FIFA World Cup 2026 Subcommittee.

30. City Council authorize the City Manager, in consultation with the Executive Director, FIFA World Cup 2026 Toronto Secretariat and the Chief Procurement Officer, to award, negotiate, and enter into non-competitive procurement contracts valued up to $1,000,000, in accordance with Section 7.1(P) of Chapter 195, Section 7.1(P), for the purposes of delivering the FIFA World Cup 2026, provided that:

a. the City Manager and the Executive Director, FIFA World Cup 2026 Toronto Secretariat have determined that the agreement is necessary to meet the requirements of the FIFA Host City Agreement;

b. the agreements do not conflict with the Council approved FIFA World Cup 2026 Procurement Plan;

c. the costs are funded through the approved 2026 FIFA World Cup 2026 Operating and Capital budgets;

d. the City Manager and the Executive Director, FIFA World Cup 2026 Toronto Secretariat report, for information, on the use of this authorization to the Executive Committee through the FIFA World Cup 2026 Subcommittee; and

e. the terms and conditions are satisfactory to the City Manager and the Executive Director, FIFA World Cup 2026 Toronto Secretariat, and are in a form satisfactory to the City Solicitor.

31. City Council request the Executive Director, Transit Expansion conduct a high-level analysis of grade separation, underground, or at-grade alternative options for the Eglinton East Rapid Transit project and report in 2026 on a high-level assessment of risks and considerations of an alternative alignment, including necessary changes to current approvals, and the timeline that an alternative approach would impose on the project.

32. City Council direct the City Manager conduct a review of the homelessness outreach programs delivered by Toronto Shelter and Support Services, Toronto Public Health, Social Development and the Housing Secretariate to support better coordination of services aimed at improving the impact of these programs to deliver more long-term housing solutions for vulnerable individuals.

33. City Council authorize the General Manager, Fleet Services, to donate up to five generators at no cost to Kyiv City State Administration in Ukraine for humanitarian purposes.

34. City Council authorize the Medical Officer of Health to enter into agreements and other suitable arrangements, on behalf of the City of Toronto, for the transfer of funds to the Angel Foundation for Learning ($100,000.00) and the Toronto Foundation for Student Success ($700,000.00) for the purpose of administering municipal funds to eligible new school communities as part of the Phase 3 expansion of the Student Nutrition Program, on terms satisfactory to the Medical Officer of Health and in a form satisfactory to the City Solicitor.

35. City Council authorize the City Manager and the Chief Financial Officer and Treasurer to allocate the $75.0 million in-year expenditure management target, across applicable City divisions, which will amend the Council-adopted 2026 Operating Budgets for specific divisions while maintaining the overall consolidated City Budget.

The purpose of this report is to recommend the additional approvals required to give effect to the 2026 Budget and includes the following matters:

2026 Property Tax Rates and Related Matters

City Council must enact a by-law to levy property tax rates that generate the tax revenue set out in the City’s budget. This report recommends the 2026 municipal tax rates, in alignment with the 2026 Mayor's Proposed Budget.

For 2026, an average budgetary tax rate increase of 0.57 percent is proposed, as detailed in Table 1. This includes a 0.70 percent increase for residential and industrial properties and a 0.35 percent increase for multi-residential and commercial properties. Additionally, this report recommends an incremental tax rate increase for the City Building Fund Levy to support critical capital investments in transit and housing. This includes a 1.50 percent increase for residential and industrial properties, and a 0.75 percent increase for multi-residential and commercial properties.

Table 1: 2026 Recommended Municipal Property Tax Rate Increases

This report also recommends continuation of the City’s existing capping approaches, and annual adjustments to the income threshold for the City’s property tax, solid waste and water relief programs.

2026 Education Property Tax Levy

This report recommends adoption of the 2026 education tax rates and education property tax levy for school purposes, as required by legislation. The City of Toronto levies and collects education taxes on behalf of the Province of Ontario, based on the education tax rates set out in Ontario Regulation 400/98, as amended. The education property tax rates prescribed by the Province for 2026 remain unchanged from the previous year for all classes. Accordingly, the average household will see no increase in their education tax this year.

2026 User Fees

User fees are reviewed and adjusted through the budget process, including the final rates and service fees for Rate Supported Programs (Solid Waste Management Services and Toronto Water). The 2026 Mayor’s Proposed Budget outlines estimated revenues from user fees, subject to City Council approval as required by the City of Toronto Act, 2006. This report seeks Council approval for user fee changes and the introduction of new fees.

Provincial Gas Tax and Build Communities Strong Fund

In accordance with the directive to report annually to City Council through the capital budget process, this report provides an overview of the Provincial Gas Tax and Build Communities Strong Fund programs, which are vital to supporting Toronto's public transit and infrastructure investments. These programs, as outlined in the 2026-2035 Capital Budget and Plan, have enabled the City to fund key projects aimed at maintaining and expanding its transit network. Details of the planned eligible projects funded under these programs are included in Appendix B.

Other Items

This report also makes recommendations with respect to matters related to the 2026 Budget that do not fall under the strong mayor powers:

- financial governance, budget implementation, and delegated authorities, including suspension of the Toronto Parking Authority Net Income Share Agreement, in‑year expenditure management measures, capital cash flow acceleration, and related financial and expenditure authorities to support effective budget delivery;

- operational service delivery and capital management actions, including updates to solid waste collection communications and the consolidation of transit‑related capital reserves into the City Building Reserve Fund to support long‑term infrastructure priorities;

- regulatory framework and enforcement updates, including amendments to Toronto Municipal Code chapters to modernize maximum fines, enable officer and director liability, and enhance compliance and deterrence;

- program, community, and service‑focused initiatives, including Parks and Recreation partnerships, expansion of the Air Conditioner Program for low‑income and vulnerable residents, acceptance of donations, humanitarian assistance, community nutrition funding, and reviews of homelessness outreach services; and

- authorities and oversight measures to support major City initiatives, including funding flexibility, procurement and reporting authorities to support the delivery of the FIFA World Cup 2026, as well as targeted transit planning analysis.

2026 Municipal Property Tax Rates and Related Matters

The tax ratios and rates recommended in this report reflect tax policy decisions adopted by City Council as permitted and/or mandated by Provincial regulatory requirements, including:

- one-half of the tax rate increase on the Residential property class to be applied to the Commercial;

- the full tax rate increase on the Residential property class to be applied to the Industrial property

class; and

- one-half of the tax rate increase on the Residential property class to be applied to the Multi-Residential property class, as recommended by staff.

Municipal Tax Levy

The recommended total municipal tax levy for 2026 is summarized in Table 2:

Table 2: 2026 Municipal Tax Levy

As per the above table, the City will generate $6.249 billion in municipal property tax funding, including an incremental $35 million associated with the 0.70 percent increase for the operational levy and an incremental $75 million reflective of a 1.5 percent increase for the City Building Fund levy.

Impact of Operational and City Building Fund Levy Increases

The average residential property value for tax assessment purposes for 2026 is $692,140. A summary of the 2026 tax impacts on the average residential property is outlined in Table 3. The average home will receive a municipal property tax bill of $4,252 for 2026. This excludes provincial education property taxes.

Table 3: Average Residential Impact of Operational and City Building Fund Levy Increases in 2026

The 2026 operational levy and City Building Fund levy increases on the various property classes are outlined in Table 4 below:

Table 4: Impact of Operational and City Building Fund Levy Increases in 2026 by Property Class

Education Tax Rates Impact

The education property tax rates prescribed by the Province for 2026 remain unchanged from the previous year for all classes, including the education rates for certain properties where municipalities are permitted to retain the education portion of payment in lieu of taxes.

Accordingly, the average household assessed at $692,140 in 2026 will see no increase in their education tax bill of $1,059, which has remained the same since 2020. The total impact of 2026 municipal and education property taxes on the average home is presented in Table 5 below.

Table 5: 2026 Total Residential Impact for the Average Home

The City is required by legislation to levy and collect property taxes for school purposes at the tax rates prescribed by the Minister of Finance. For 2026, the education tax levy is $2.213 billion. For certain payment in lieu of taxes properties, the portion of the payment that would normally go toward education taxes is retained by the City under prior agreements and existing legislation/regulations. Of the total education levy, the City retains only $4.223 million (0.2 percent) as the education portion of payment in lieu of taxes, as permitted by Ontario Regulation 121/07, and remits the remaining balance of $2.209 billion to the Province. The City is required to remit the amounts levied for school purposes within the calendar year.

The current 15 percent education tax rate reduction for the small business tax subclass will result in $25.1 million in reduced education taxes for the subclass in 2026.

2026 User Fees

Adjustments Requiring City Council Approval

In accordance with the City User Fee Policy, Council approval is required for user fee revenue set out in the 2026 Mayor’s Proposed Budget, including fee adjustments above inflation, new fees, discontinuations, rationalizations, transfers, and technical adjustments. The proposed changes to user fee adjustments, excluding automatic inflationary user fees, will generate $15.14 million in total incremental revenue, including $0.012 million in new fees. Revenue impacts from the proposed changes are reflected in the Budget Notes for each Program and Agency.

Automatic Adjustments: User Fee Inflationary Increases

Annual inflationary increases are applied under delegated authority, generating an additional $16.25 million in the 2026 Budget. The Chief Financial Officer and Treasurer has been delegated authority to apply these increases effective January 1 of each year. It is recommended that authority be delegated to apply inflationary adjustments to new fees in 2026, as outlined in Appendix 4 of the 2026 Mayor’s Proposed Budget.

Water, Wastewater and Solid Waste Fees

Proposed increases in water, wastewater, and solid waste fees were initially adopted by City Council as part of the 2026 interim rates and service fees (Item EX28.9 and Item EX28.10), with final approval requested in this report. These fee adjustments are aligned with financial modeling and the 2026-2035 Capital Budget and Plan.

- A 3.75 percent increase in solid waste management and increases in water and wastewater rates of 3.75 percent for Block 1 and 1.25 percent for Block 2 are expected to generate $14.13 million and $55.15 million in additional revenue for Solid Waste Management Services and Toronto Water respectively to support operational and capital program needs.

- Inflationary increases to water and wastewater service fees for services provided by Toronto Water and Revenue Services are projected to generate an additional $2.3 million.

Provincial Gas Tax and Build Communities Strong Fund in the City’s 2026-2035 Capital Budget and Plan

Provincial Gas Tax:

Introduced in 2004, the Provincial Gas Tax permanently allocates two cents per litre of provincial gas tax revenues to municipalities to expand and improve public transit systems. Annual allocations are determined by a provincial formula based on transit ridership (70 percent) and population (30 percent), ensuring funding is responsive to transit demand and population growth.

Since 2005, Toronto has received over $3.3 billion in Provincial Gas Tax funding, with the 2024-25 allocation confirmed at $178.2 million. The 2026-2035 Capital Budget and Plan includes approximately $866 million in Provincial Gas Tax-funded investments, supporting essential transit projects. Specific details are provided in Appendix B, Table 1.

Build Communities Strong Fund

(formerly the Canada Community Building Fund)

The Build Communities Strong Fund is a long-term federal infrastructure funding program announced in 2025, that incorporates and will replace the Canada Community Building Fund as its Community Stream in 2026-27. The program provides stable, predictable funding to municipalities on a per-capita basis to support local infrastructure priorities, including public transit.

Since the introduction of the federal gas tax-based funding framework in 2005, Toronto has received $3.4 billion, primarily directed toward the Toronto Transit Commission to support transit system investments.

In 2025, Toronto received $184.0 million under the Canada Community Building Fund. Over the next decade, the City projects $1.9 billion in funding under the Build Communities Strong Fund (including the Canada Community Building Fund Community Stream) to support initiatives such as fleet replacement and state of good repair projects, helping maintain the reliability and functionality of Toronto’s transit network. Full details of planned projects can be found in Appendix B, Table 2.