The budget passed by a vote of 42-2 on Wednesday evening, ending two days of debate for councillors and Mayor John Tory.
"This budget makes important new investments in services and infrastructure, while keeping the residential budget tax increase at 2.25 per cent — less than the rate of inflation — which will help Toronto families," Tory said in a statement.
The budget also includes a 0.5 per cent hike to pay for the Scarborough subway and higher fees for garbage removal and other services.
Tory thanked his colleagues on Twitter for giving his first budget as mayor "the confidence it deserves."
Tory and the rest of council also gave outgoing city manager Joe Pennachetti a standing ovation, marking completion of his 14th budget.
Councillors Rob Ford and Giorgio Mammoliti voted against the budget.