Toronto small business commercial property tax relief rises to 20%: How much could your store save per year?
On April 25, Toronto Mayor Olivia Chow announced some concrete news at a meeting with Chinese-language media: the small business commercial property tax reduction is increasing from 15% to 20%, directly benefiting approximately 28,000 shops citywide. If your store is on Queen West, in a Scarborough plaza, or in Chinatown, this number is worth five minutes of your time to calculate.
From 15% to 20%: What exactly changed?
Toronto's Small Business Property Tax Subclass isn't new—it's been in place for several years. The previous standard was a 15% tax rate discount, meaning eligible small businesses paid 85% of the standard rate on their commercial property taxes. Chow's recent increase to 20% (paying 80% of the rate) isn't earth-shattering, but for small shops squeezing out profits downtown, saving a few thousand dollars a year is real money.
The city's logic is simple: commercial property taxes have risen sharply in recent years. According to Toronto's 2025 budget data, annual commercial property tax increases exceeded 10% in some areas, while many small businesses' profit growth can't keep up with tax bills. Raising the reduction from 15% to 20% gives brick-and-mortar stores some breathing room.
Who Qualifies for This Deduction?
Not all commercial properties automatically qualify. Toronto has clear thresholds for the Small Business Property Tax Subclass. Under current standards, a commercial property's Current Value Assessment (CVA) must be below a certain limit, and the property must be used for actual business operations rather than investment holding. Currently, about 63% of Toronto's commercial properties fall into this subclass.
Specifically, these types of business owners should pay the most attention:
- Street-Level Retail Store— Clothing stores, grocery stores, pharmacies, flower shops
- Food & Beverage Industry—Chinese restaurants, bubble tea shops, bakeries, cafés
- Personal Services Industry— Hair salons, nail salons, dry cleaners, phone repair shops
- Small Office—Professional services such as accountants, immigration consultants, and insurance brokers
If you're unsure whether your property already benefits from this reduction, check last year's property tax bill. If the rate column shows 'Small Business Subclass' or similar wording, you're already on the list. Once the new policy takes effect, eligible properties will automatically receive the new rate—no separate application needed.
How do I check my eligibility?
The easiest way is to call 311. Toronto's municipal hotline 311 offers Chinese language service. Provide your commercial property address or roll number, and staff can look up your property classification and applicable tax subclass.
You can also check by entering your address on the city's property tax inquiry page. If you find your property isn't in the small business subclass but believe it should qualify, you can submit a Request for Reconsideration. However, this process requires supporting business documents, typically including a business license, lease, and operating statements. It's advisable to have an accountant or business advisor review your materials first to avoid rejection and rework.
How much can you actually save?
Take a small restaurant in downtown Toronto with an assessed value of about $800,000. At the 2025 commercial property tax rate of roughly 1.5%, the annual property tax would be around $12,000. With a 15% reduction, you'd pay $10,200. Under the new 20% reduction, that drops to $9,600—saving $600 a year.
If the property assessment is higher, the savings increase accordingly. A mid-sized retail space assessed at $1.5 million would have an annual tax of about $22,500, saving $1,125 more under the new reduction than the old one. For the restaurant industry, where labor and food costs are rising, that's enough to cover half a month's electricity or two weeks of a part-time employee's wages.
Note that if you lease your property and property taxes are passed through to you (triple net lease), whether this reduction reaches you depends on your lease terms. Many commercial leases have property taxes on a pass-through basis—the landlord bills you the actual amount after receiving the tax bill. In this case, if the landlord saves, you save. But if your lease specifies a fixed rate not adjusted for actual taxes, you'll need to renegotiate with your landlord.
Compared to other Ontario cities, how does Toronto's effort stack up this time?
Small business property tax relief policies vary considerably across GTA municipalities. Mississauga currently offers about 20-25% relief for small businesses, Markham about 15%, and Richmond Hill between 15-20%. Toronto's recent increase to 20% barely reaches the middle range, but because Toronto's commercial property tax rates are already higher than the 905 region (properties with similar assessments pay 30-50% more tax in 416 than 905), the actual savings from a 20% reduction are actually larger in the 416 area.
Besides property tax, what else can you save on?
At the same roundtable, Olivia Chow also announced an increase in the income threshold for the seniors' property tax deferral program—from $50,000/year to $62,000/year. If your parents own property in Toronto and have an annual income below $62,000, have them call 311 to inquire.
For Chinese business owners running shops, property tax is just one part of fixed costs. Ontario has several often-overlooked rebates and grants: the CDAP can reimburse up to $15,000 for e-commerce and digital expenses; if you hire newcomers or youth, Ontario's hiring subsidies also have limits. Our previous articleOntario Digital Grant Application GuideDetailed steps included.