Families will be hit by £250 a year council tax rises by 2028 following Jeremy Hunt's Autumn Statement, new analysis shows.
The Chancellor announced sweeping changes to the way local authorities can raise funds - giving them the power to hike council tax by up to 5% a year.
At the moment they cannot go above 3% without getting approval by holding a local referendum.
It is expected that nearly all cash-strapped Town Halls will ask residents for the full sum as they try to protect services amid soaring inflation.
However the hikes will be "extremely difficult" for struggling households, the Office for Budget Responsibility (OBR) warned today.
The Treasury reckons that 95% of councils will hike council tax by the full amount they're allowed.
This means, the OBR warns, the average Band D bill will rise to around £2,300 in 2027/28. The OBR says the expected windfall is the equivalent of raising the average Band D bill by £250 in 2027/28.
Bands are based on the historic value of a home - meaning the hike for those designated as A, B and C will be lower, while it will be even higher for those from E to H.
The move will raise £3.3 billion in 2026/27, rising to £4.8 billion in 2027/28, the OBR said.
Today the County Councils Network - which represents 36 mainly Conservative authorities - said local authority leaders still face "very difficult decisions" amid sky-high inflation and social care costs.
Chairman Tim Oliver also said "some county leaders may be reluctant" to impose 5% hikes "during a cost-of-living crisis considering ratepayers in county areas currently pay the highest bills on average".
Georgia Gould, the chair of London Councils, said borough finances "remain in a critical condition", estimating the capital's councils had a £700 million shortfall for next year before the Chancellor's statement.
"Council tax is not the answer to the inadequate funding we're grappling with. Council tax rises during a cost-of-living crisis are extremely difficult for the struggling households we're determined to support. But even if council tax goes up, it could never plug that 700-million funding gap," she said.
Cllr James Jamieson, chairman of the Local Government Association, added: "We have been clear that council tax has never been the solution to meeting the long-term pressures facing services - particularly high-demand services like adult social care, child protection and homelessness prevention.
"It also raises different amounts of money in different parts of the country unrelated to need and adding to the financial burden facing households."
It comes on a day of bleak news, with the OBR saying household disposable income will plummet a staggering 7.1% in real terms over this year and next year - the biggest drop since records began in 1956.
The watchdog said disposable income will still be below pre-pandemic levels by 2028.
It comes as charities warn struggling Brits face a "frightening obstacle course just to afford the essentials".
The OBR has confirmed that the UK has gone into a recession which it predicts will last "just over a year" - during which time more than half a million people will lose their jobs.
Unemployment will hit 4.9% by mid-2024, the watchdog has predicted, up from 3.5%.
In its report the OBR said: "The UK is being hit by a large terms of trade shock that is set to push inflation to its highest rate in 40 years and drive historic falls in real household disposable income.
"This inevitably makes households worse off."
It said that this the highest fall in living standards since the Office for National Statistics (ONS) began in 1956-57.
The watchdog said it was only the third time that disposable income had fallen for two consecutive fiscal years - the last occasion being in the aftermath of the 2008 global crisis.
Today Mr Hunt said that his plans would ensure the recession was "shallower", and said around 70,000 jobs would be protected.
Thinktank the Resolution Foundation said the biggest losers from today's announcement will be high energy users on middle and higher incomes – with almost one-quarter (23%) of households facing bills of over £4,000 next year.
Analysts warned that many on lower incomes will see huge bill increases too.
Those on means-tested benefits will receive payments totalling £900 - but those earning £1 too much to qualify for those benefits will get nothing.
The foundation said that 2.3 million of the poorest fifth of households do not receive means-tested benefits, and could see bills rise by £1,930 compared to 2021-22.
Chief executive Torsten Bell said: “In the short-term, the Chancellor has announced a smaller but more progressive energy support package, with two thirds going to the poorest half of households. But there will still plenty of rough justice – particularly for the 2.3 million low-income households who don’t receive means-tested benefits and therefore don’t qualify for lump-sum payments.
“The Chancellor announced concrete and big tax rises, disproportionately hitting middle and higher income households, while significant spending cuts were only pencilled in for after the next election and are unlikely to be delivered on the scale envisaged.
“Stepping back, the UK government has gone from announcing the biggest tax cuts in 50 years to the biggest tightening since 2010 in just a few weeks."
