The rise comes after the Executive Council approved an application from Hong Kong Tramways.
The government said the new fare will be HK$3.30, or 10 percent more, for those aged 12 and above.
The rise will be steeper for the elderly, as their new fare of HK$1.50 is an increase of 15 percent.
Children aged between three and eleven will pay HK$1.60, or a rise of nearly 7 percent.
The price for monthly tickets will stay the same at HK$260.
The government said a number of factors were considered as part of the vetting process, such as rising operating costs, the quality and quantity of service provided and public acceptability.
“The government considered the fare increase necessary for maintaining stable operation, and that [its] proposed level of increase is acceptable,” a spokesperson said in a statement.
“After the fare increase, the tramway remains the most economical means of transportation serving the northern shore of Hong Kong Island.”
Officials said they’ll continue to work with the company and encourage it to find different sources of revenue, especially tying in with its concept of “tourism everywhere” and preserving its historical value.
The last fare increase for trams was in July 2022, when different classes of charges also rose by up to around 15 percent.