The Toronto is proposing a 2.2% property tax increase in its 2026 budget, marking the smallest hike of Mayor Olivia Chow’s time in office as the city heads toward a municipal election in October.

According to the mayor’s office, the proposed increase is split between a 0.7% rise in residential property taxes and a 1.5% increase tied to the city building levy. The move follows significantly higher increases in previous years, including a 9.5% hike in 2024—the largest in 25 years—and a 6.9% increase in 2025, both driven by major budget shortfalls.

Chow framed the softer increase as a response to affordability concerns. “The 2026 budget is about making life more affordable for Toronto families,” she said, noting that residents continue to feel pressure from the rising cost of living. As of December, the city’s operating budget deficit had been reduced to $1 billion, down from $1.8 billion the year before.

The mayor has said the city’s ability to keep taxes lower this year is due in part to alternative revenue tools, including the luxury home tax, higher municipal land transfer taxes on homes valued above $3 million, and additional taxes on vacant properties. “I’m asking people that can afford to pay more to pay more,” Chow said in a year-end interview.

City budget chief and Don Valley North councillor Shelley Carroll previously described the 2026 budget as a “leaner” one—focused on being intentional rather than cutting services.

The full budget details will be released Thursday morning, followed by public consultations. A more finalized version is expected by February 1, with council adoption likely 30 to 55 days later, depending on amendments.

The 2026 budget could also be Chow’s final fiscal plan as mayor, as she has not yet confirmed whether she will seek re-election. With former mayor John Tory reportedly considering a comeback, the proposed tax increase may become a key issue in the months leading up to the election.