跨境税务台
跨境税务

Hong Kong Salaries Tax Rates and Allowances: How Much You Actually Pay on Your Salary

Territorial basis: where the work is done

The Inland Revenue Department describes the starting point in one sentence: “Salaries tax is chargeable on most but not all of the income from employment, offices and pension arising in or derived from Hong Kong.” The test is therefore the source of the employment income — the work done in or deriving from Hong Kong — not the place where the employer happens to be registered, and not the location of the contract itself.

The Inland Revenue Department’s Chargeable Income guidance states that any salary, wages or director’s fees earned are chargeable to salaries tax. The amount to report is the gross amount before deductions of the employee’s contributions to a recognised occupational retirement scheme or mandatory provident fund scheme.

What employment income must be reported

The reporting figure is not limited to cash salary or take-home pay. Assessable examples include:

  • Commission and rebates
  • Bonuses
  • Leave pay
  • End-of-contract gratuities
  • Payments in lieu of notice accrued on or after 1 April 2012

Income received from an employer as an allowance, perquisite or fringe benefit must also be reported. Employer-borne tax forms part of the remuneration reporting requirement. Tips received because of employment must likewise be reported, including tips paid by someone other than the employer.

These items enter the salaries-tax computation through assessable income. The employee then applies the permitted deductions and eligible allowances to determine net chargeable income.

How salaries tax is computed

The Inland Revenue Department’s tax computation guidance sets out two calculations.

The first calculates tax at progressive rates on net chargeable income, meaning assessable income after deductions and allowances.

The second calculates tax at the standard rate on net income, meaning assessable income after deductions but before allowances.

If progressive-rate tax on net chargeable income exceeds standard-rate tax on net income, the salaries tax payable is the lower amount. Allowances therefore reduce the income base for the progressive calculation, but they are not deducted when determining net income for the standard-rate comparison.

Progressive and standard rates

The official Tax Rates of Salaries Tax & Personal Assessment table applies the following progressive schedule for the Year of Assessment 2020/21 onwards:

  • On the first $50,000 — 2% — $1,000
  • On the next $50,000 — 6% — $3,000
  • On the next $50,000 — 10% — $5,000
  • On the next $50,000 — 14% — $7,000
  • On the remainder — 17%

From 2024/25 onwards, the standard rate is two-tiered:

  • On the first $5,000,000 of net income — 15%
  • On the remainder — 16%

A salary may produce different amounts under the progressive and standard calculations because allowances reduce net chargeable income but not net income. The assessment uses the lower resulting tax rather than selecting the higher figure.

Allowances from 2026/27 onwards

For the Year of Assessment 2026/27 onwards, the Inland Revenue Department’s seven-year allowances table gives the following amounts in Hong Kong dollars:

  • Basic allowance: 145,000
  • Married person’s allowance: 290,000
  • Child allowance: 140,000 for each of the 1st to 9th child. The same increased amount applies to a child born during the year.
  • Dependent brother or dependent sister allowance: 37,500
  • Dependent parent and dependent grandparent allowance: for each qualifying parent or grandparent:
    • 27,500 where the person is 55 years old or above but below 60
    • 55,000 where the person is 60 years old or above
    • 55,000 where the person is under 60 but eligible under the Government’s Disability Allowance Scheme
  • Additional dependent parent and dependent grandparent allowance: the same age and disability bands apply
  • Single parent allowance: 145,000
  • Disabled dependant allowance: 75,000
  • Personal Disability Allowance: 75,000

Each allowance for which the taxpayer is eligible reduces assessable income after deductions, producing the net chargeable income to which the progressive rates apply. The standard-rate calculation remains based on net income before allowances.

MPF deduction and the HK$18,000 cap

Under the Inland Revenue Ordinance, mandatory contributions to MPF schemes are deductible in computing an employee’s assessable income. The MPF deduction guidance sets the maximum deduction for each year of assessment at HK$18,000 for 2020/21 onwards.

The cap concerns the employee’s total deductible mandatory contributions, not each employer separately. The Department’s example for 2025/26 involves an employee receiving monthly salaries of $30,000 from Company A and $20,000 from Company B. Although the employee makes $30,000 of mandatory contributions to the two employers’ MPF schemes, the maximum deductible under salaries tax is $18,000 only.

The fact that contributions were made to two separate schemes does not create an additional MPF deduction cap.

Rules for someone with two employments

The income and deduction sides must be considered separately. Salary, wages, director’s fees and other assessable employment income received from each employer remain part of the gross income reporting requirement.

The MPF deduction limit is not calculated separately for each employer. The contributions under both employments are considered together, and the maximum salaries-tax deduction remains HK$18,000. Employees therefore cannot apply the cap once to Company A and again to Company B.

Married couples and joint assessment

A married couple receiving employment income is generally assessed as separate individuals for salaries tax. The Inland Revenue Department’s joint assessment guidance allows the couple to elect joint assessment where the election can reduce its overall tax liability.

If one spouse has no income assessable under salaries tax, that spouse is entitled to claim the married person’s allowance and need not elect joint assessment. Joint assessment can also be advantageous where one spouse’s assessable income is less than that spouse’s tax allowance.

The election must be made on a yearly basis. Under joint assessment, the spouses’ incomes are aggregated, and the married person’s allowance or other allowances for which the couple is eligible are deducted from the joint total income.

2025/26 tax reduction and checking the figure

The official tax-rates table records a 2025/26 tax reduction of 100%, subject to a maximum of $3,000 per case. The reduction applies to salaries tax as well as the other listed taxes.

Use the Inland Revenue Department’s tax computation page as the official calculator entry point when checking the progressive and standard calculations. For the reporting checklist, use the Department’s Chargeable Income guidance. For a married couple, the Department’s joint assessment page is the official return-guidance entry point.

Questions people ask about this

What is a year of assessment? A year of assessment runs from 1 April to 31 March. Rate and allowance columns headed 2025/26 or 2026/27 refer to that assessment year.

Does the timing of an employer payment determine whether it is reportable? Most forms of income paid by an employer are taxable regardless of whether payment is made before, during or after employment. The reportable treatment also applies whether the payment is made under the employment terms or in excess of them.

What are examples of reportable benefits? Cash allowances, liability of employees discharged by employers, convertible benefits, education benefits and holiday journey benefits are examples. Income received as an allowance, perquisite or fringe benefit should be included in the tax return.

Must termination payments and retirement benefits be reported? Yes, termination payments and retirement benefits should be reported. This includes accrued benefits received from recognised occupational retirement schemes and benefits received or deemed received from mandatory provident fund schemes.

How is joint assessment elected on the individual return? Each spouse completes a Tax Return - Individuals (BIR60) and makes the election in part 4.4. Both spouses have to sign part 13 of each tax return.