Rapid developments in hardware, software, and communication technologies, software tools and algorithms for big data processing have facilitated the emergence of Internet-connected sensory devices that provide observations and data measurements from the physical world. By 2025, it is estimated that the total number of Internet-connected devices being used will be between 50 and 75 billion. As these numbers grow and technologies become more mature, the volume of data being published will increase. The technology of Internet-connected devices, referred to as the Internet of Things (IoT), continues to extend the current Internet by providing connectivity and interactions between the physical and cyber worlds. In addition to an increased volume, the IoT generates big data characterized by its velocity in terms of time and location dependency, with a variety of multiple modalities and varying data quality. Intelligent processing and analysis of these big data are the keys to developing smart IoT applications. This article assesses the various machine learning methods that deal with the challenges presented by IoT data by considering smart cities as the main use case. The key contribution of this study is the presentation of a taxonomy of machine learning algorithms explaining how different techniques are applied to the data in order to extract higher-level information. The potential and challenges of machine learning for IoT data analytics will also be discussed. A use case of applying a Support Vector Machine (SVM) to Aarhus smart city traffic data is presented for a more detailed exploration.