Understanding how commercial property taxes work is critical for small business owners across Toronto’s Business Improvement Areas. Below is an overview of how your tax bill is calculated, how your property is assessed, and what TABIA is doing to advocate for a fairer system.
Commercial property taxes in Toronto are calculated using this formula:
Property Tax = Assessed Value × Total Commercial Tax Rate
Your assessed value is determined by MPAC (the Municipal Property Assessment Corporation), and the tax rate is set annually by City Council, with additional levies such as the City Building Fund and the provincial Education Tax Rate.
In 2025, the commercial property tax rate is:
So, if your property is assessed at $1 million, your estimated 2025 property tax would be approximately $22,755.
Your commercial property assessment is set by MPAC, based on the Current Value Assessment (CVA) model. This is meant to reflect the market value of your property as of a specific date—in this case, January 1, 2016 (yes, it’s very out of date).
For main street businesses and small commercial storefronts, MPAC typically uses the Direct Comparison Approach, which means:
While this approach makes sense for street-facing shops, the continued use of 2016 values is creating major inequities in the current system.
Tax ratios determine how much more commercial properties pay compared to residential ones of the same value.
Since 2001, the City of Toronto has worked to reduce this ratio—from 3.36 down to 2.04 in 2024. This has been part of an ongoing strategy to make Toronto’s commercial taxes more competitive and fair. TABIA has played an important role in advocating to reduce the commercial tax ratio for its members.
If you believe your property is over-assessed or misclassified, you can file a Request for Reconsideration (RfR) with MPAC—free of charge.
Steps:
For non-residential properties, you may also file an appeal directly with the Assessment Review Board (ARB). Learn more at tribunalsontario.ca/arb.
In 2022, TABIA played a leading role in establishing Toronto’s Small Business Property Tax Subclass—a new tax tool that provides a 15% reduction on the municipal portion of taxes for eligible commercial properties.
Highlights:
Is it perfect? Not yet. Strip malls, multi-tenant buildings, and some mixed-use properties still fall through the cracks. That’s why TABIA is actively working with the City to review and improve the subclass for 2026.
Updated May 2025.