The new fare structure means a zone 1 adult cash fare will increase from $1.50 to $1.90, and a zone 4 adult cash fare will increase from $2.90 to $3.60.
Bus operators pushed for the rise at Otago Regional Council annual plan meetings early last year, arguing the Dunedin bus system badly needed investment and lowering fares did not attract more passengers.
The increase was included in the draft annual plan this year, and despite some opposition it was confirmed by the full council on Wednesday.
Council corporate services director Wayne Scott said yesterday the increases were due to the rising cost of operating buses, modernising the fleet, adding additional services, and improving infrastructure such as shelters.
Before the 2007-08 year there had been no increase in Dunedin bus fares for five years.
Mr Scott said while the average increase was 25%, it varied because of rounding.
Dunedin buses were subsidised through targeted rates and government funding.
"Government policy set out in the New Zealand Transport Agency guidelines says bus users should pay for 50% of the cost of services," Mr Scott said.
"The council supports this target. Currently, only about 40% of the cost of running Dunedin bus services is recouped from bus fares.
"In order to have a sustainable bus service and continue to make prudent and practical improvements that benefit Dunedin bus users it is necessary to raise fare prices."
