City of Toronto Proposes Deeper Property Tax Relief for Small Businesses
A Win for Toronto BIAs and Main Street Businesses
The City of Toronto released its proposed budget that introduced a 1.1% commercial property tax increase. Despite this moderate increase, we are pleased to share that our advocacy work has resulted in good news for small businesses.
The City is proposing to increase the Small Business Property Tax Subclass relief from 15% to 20% on the municipal portion of commercial property taxes. If approved by City Council in the coming weeks, this change would mean more than 28,000 small business properties across Toronto will receive an additional 5% tax reduction starting in 2026, for a total municipal tax break of 20%.
This proposal does not change who qualifies for the Small Business Tax Subclass. No new properties would be added at this time. However, for businesses that already qualify, this deeper discount means real savings and meaningful relief. For some properties, depending on final Council decisions still to come, this could result in a reduction in their overall property tax bills. TABIA has long advocated for stronger, targeted tax relief for local small businesses, and this proposed relief is the result of that work.
Both a Municipal and Provincial Advocacy Win: TABIA is proud to see Toronto continue to build on the Small Business Tax Subclass, which became possible only after years of advocacy with the Province to allow municipalities to create tailored tax classes and benefits. From the start, Toronto City Council has shown strong buy-in, and this proposed increase is further proof that City leaders recognize the pressures facing small, main-street businesses today. While this change will not solve every challenge small businesses are facing, it is an important step and a clear signal that the City understands that small businesses are struggling in today’s economic climate and is actively looking for ways to help.
Next: TABIA will continue to work closely with City officials to review and advocate for expanding the current definition of the Small Business Tax Subclass, so more deserving small businesses can be included in the future.
We thank the City of Toronto for this proposal and for its continued support of local businesses and the BIAs that serve them. We look forward to the upcoming Council debate and will keep our members informed as the budget moves forward.
DOES YOUR BUSINESS QUALIFY?
The Small Business Property Tax Subclass applies to eligible small commercial properties, generally those with an assessed value between $10,000 and $1 million citywide, or up to $7 million in designated growth areas, and that meet size, location, and property-type criteria set by the City. The relief applies to property owners, but business tenants may benefit depending on how property taxes are handled in their lease.
This tax relief is automatic. Property owners do not need to apply. If a property qualifies, the reduced tax rate will automatically appear on the final municipal property tax bill.
If a property owner believes their property should qualify but does not see the relief applied, they can submit a Request for Reconsideration to the City of Toronto.
Tenants who are unsure whether their building qualifies are encouraged to speak with their landlord for confirmation.