The £5 increase will come into force in April, and is significantly less than the £10.50 rise that was applied earlier this year.
The government said it would expand the Simple Payment Plan (SPP) scheme so 9,000 extra households facing financial difficulty can split the annual payment into more manageable fortnightly and monthly instalments.
The cost of a TV licence is due to increase in line with inflation each year until 2027, following an agreement made in 2022.
The government has returned to calculating the increase by using an annual inflation rate rather than a monthly one, which was used last year.