Toronto’s 2026 budget is being sold as an affordability package – but behind the modest tax increase are decisions that could shape the city’s risk profile for years, from flood exposure to emergency response.
On Thursday, the city tabled an $18.9 billion operating budget and a record $63.1 billion, 10‑year capital plan, with major spending on housing, transit, roads, bridges and water infrastructure. The plan includes a dedicated City Building Fund levy to support transit and housing.
For homeowners, the combined residential property tax hike and City Building Fund levy comes to about 2.2% – roughly $91.53 a year, or $7.63 a month, on the average assessed Toronto home. That’s a far cry from the near‑double‑digit increases of previous years, but it still lands in a cost‑of‑living environment where “every dollar matters,” as Mayor Olivia Chow has emphasized.
For insurers and brokers, the more interesting story is where the money goes – and where it doesn’t.
The capital plan’s heavy emphasis on repairing aging infrastructure and investing in water systems, roads and bridges is directly linked to how the city will withstand severe weather and secondary perils. Toronto is also continuing grants to help homeowners protect against basement flooding and upgrade old furnaces, measures that can reduce water‑damage and fire risk over time.
At the same time, interim 3.75% increases in Toronto Water and Solid Waste rates, now baked into the staff‑prepared budget, signal ongoing strain on core services. If infrastructure investment lags actual need, the city could still see more water‑related losses even as rates and fees rise.
Community safety is another budget priority. The plan calls out investments in emergency response and neighbourhood safety initiatives, with more resources for police, fire and paramedic services. Faster response times and better‑resourced services can mitigate the severity of fires, violent incidents and medical emergencies – all of which feed into property, liability and accident benefits claims.
However, the budget also relies on $788 million in efficiencies, reductions and offsets to manage ongoing pressures. Carriers will be watching closely to see whether cost‑cutting in any area undermines the city’s capacity to deliver on its safety ambitions.
To blunt the impact of rising costs, Toronto is keeping in place a 15% property tax reduction for more than 28,000 small businesses, and a similar 15% discount for new multi‑residential properties. That may give some commercial clients breathing room to maintain or enhance coverage, but many SMEs are still wrestling with higher wages, borrowing costs and input prices.
For personal lines and commercial brokers alike, a low‑headline tax increase in a “lean” budget year doesn’t remove affordability pressure. Clients may still look to raise deductibles, trim endorsements or under‑insure assets to save on premiums – even as water, infrastructure and liability risks remain elevated.
