The 2.13% rise in its share of the precept will add an extra £5 a year to a bill for a Band D property.
A Conservative-backed plan to freeze tax levels in the borough at Friday’s full council meeting failed to gain enough support.
Conservative deputy leader Cllr Heather Phillips said the council had had an “unexpected windfall” and asked said that “for the sake of £240,000” the money for the rise was better in the pockets of the borough’s ratepayers.
She added that Labour was benefiting from the “prudent” financial decision taken by the last Conservative administration.
Her fellow Conservative, Cllr David Jeffels, also proposed a council tax freeze be put in place.
He said: “At a time when the council’s finances are in a healthier state the question must be asked ‘do we really need to increase the tax burden on our residents?’
“We shouldn’t be increasing the tax level just because we can.”
UKIP’s Cllr Neil Heritage also backed a freeze, pointing to a public consultation showing that 65% of nearly 300 residents who responded said they did not agree with the tax going up.
The motion to freeze was voted down, with the budget and the tax rise for 2020/21 passing.
In the meeting, council leader Cllr Steve Siddons (Lab) said the council was suffering from years of cuts.
He added: “This budget is set against an increasingly difficult financial climate. We are still suffering from 10 years of crippling and unnecessary austerity inflicted on local government services by this and previous Conservative governments.
“Since 2010 we have lost around 65% of our budget income.
“Next year will see the implementation of the fair funding review, which will be less than fair on this authority.”
The council tax rise will see the total paid to the council by borough residents in a Band D property rise by £5 a year to £239.75.
Scarborough Council’s share of the precept makes up approximately 13% of the total council tax bill.
Close to 70% is paid to North Yorkshire County Council, which last month voted to raise its share by 3.99%, which includes a 2% rise in the adult social care precept. That equates to an extra £52.31 a year.
Including rises from the police (up 3.91%), fire brigade (up 1.99%) and parish councils (up6.9%) a Band D property owner in the borough will get a bill for £1,966.41 for 2020/21.
It is a rise of more than £70 on the previous 12 months.
Residents in Scarborough town centre will have a slightly lower bill as there is no town or parish council covering that area.
The proposed savings for the 2020/21 year in the budget total more than £3m with more than £1m spent on upgrading a number of the borough’s public toilets.
Eight ageing bin lorries will also be replaced at the cost of £1.5m to replace eight refuse collection vehicles.
Other proposed changes include the council tax premium on properties that have been empty and unfurnished for more than five years will increase from 100% to 200% for the 2020/21 year onwards, and the premium on properties that have been empty and unfurnished for more than 10 years will increase from 100% to 300% from April 1 2021.