Hong Kong Salaries Tax: 2026 Guide to Personal Taxation
Hong Kong has a low taxation scheme for personal income tax.
Hong Kong continues to maintain its status as one of the most tax-friendly jurisdictions in the world. For the Year of Assessment (YA) 2025/26 and 2026/27, the system remains progressive, but with significantly increased allowances that benefit both local and international professionals.
Key Facts About Hong Kong Salaries Tax in 2026
- Net Chargeable Income (NCI): You are only taxed on your income after all deductions and allowances are subtracted.
- Two-Tiered Standard Rate: For high earners, a two-tiered standard rate (15% on the first HKD 5 million and 16% on the remainder) applies if it results in a lower tax liability than the progressive rates.
- Territorial Principle: Only income “arising in or derived from Hong Kong” is subject to tax.
Personal Income Tax Rates & Allowances (2025 – 2027)
The personal income for individuals is used to calculate the net chargeable taxation (income after deductions and allowances) over the fiscal year. Only the income over this allowance and less deductions would be used to calculate the taxable income using the progressive rates.
For example, if you qualified for the basic allowance in the YA of 2026/27 (April 1st 2026 to March 31st 2027), then all income over the basic allowance of HKD 145,000 would be subject to the progressive rates of the salary tax. Any personal income under this would not be taxed.
Here is a list of the allowances you can take during the year:
| Year of Assessment | 2024/2025 $ | 2025/2026 $ | 2026/2027 onwards $ |
|---|---|---|---|
| Basic Allowance | 132,000 | 132,000 | 145,000 |
| Married Person Allowance | 264,000 | 264,000 | 290,000 |
| Child Allowance | 130,000 | 130,000 | 140,000 |
| Child Allowance (Year of Birth) | 260,000 | 260,000 | 280,000 |
| Dependent Brother/Sister | 37,500 | 37,500 | 37,500 |
| Dependent Parent and Grandparent 60 or above | 50,000 | 50,000 | 55,000 |
| Dependent Parent and Grandparent between 55 to 60 | 25,000 | 25,000 | 27,500 |
| Additional Dependent Parent and Grandparent 60 or above | 50,000 | 50,000 | 55,000 |
| Additional Dependent Parent and Grandparent between 55 to 60 | 25,000 | 25,000 | 27,500 |
| Single Parent | 132,000 | 132,000 | 145,000 |
| Personal Disability Allowance | 75,000 | 75,000 | 75,000 |
| Diabled Dependent Allowance | 75,000 | 75,000 | 75,000 |
For reference, in general, the exchange rate for Hong Kong dollars is 1 USD = 7.8 HKD. Below is a guide for the progressive rate on taxable income for salary tax:
How to Calculate Your Hong Kong Salaries Tax: A Practical Example
Calculating your tax in Hong Kong is straightforward once you understand the formula. The tax is applied to your Net Chargeable Income (NCI), which is:
NCI = Total Income – Deductions – Personal Allowances
For the 2026/27 Year of Assessment, a single person is entitled to a Basic Allowance of HKD 145,000.
Case Study: Zero Tax on HKD 172,000 Income
Let’s look at a single professional with a total annual income of HKD 172,000 and no additional deductions:
- Calculate NCI: HKD 172,000 – HKD 145,000 (Basic Allowance) = HKD 27,000
- Apply Tax Rate: This NCI falls into the first bracket (0 to 50,000 HKD), taxed at 2%.
- Tax before Reduction: HKD 27,000 x 2% = HKD 540.
- Final Step: For 2025/26, there is a 100% tax reduction (capped at HKD 3,000).
- Since HKD 540 is below the cap, the Total Tax Payable is HKD 0.
Progressive Tax Rates (2025/26 onwards)
To help you plan, here is the breakdown of the current progressive brackets applied to your NCI:
- 0 – 50,000 HKD: 2%
- 50,001 – 100,000 HKD: 6%
- 100,001 – 150,000 HKD: 10%
- 150,001 – 200,000 HKD: 14%
- Above 200,001 HKD: 17%
This attractive scheme, combined with further deductions like MPF contributions or self-education expenses, is why Hong Kong remains a top destination for global talent.
You may also refer to the IRD online tax calculator to better estimate your taxes in Hong Kong. Contact Startupr if you have any questions regarding your Hong Kong salary tax or personal tax forms.
What Income is Considered “Earned in Hong Kong”?
Income and salaries tax are assessed on the employment income arising in or derived from Hong Kong. Therefore, if your employment is with a Hong Kong company to work in Hong Kong, then your full income would be chargeable to any salary tax over the year. You can, however, claim exemptions to this income tax under the following circumstances:
If all the services rendered during the year are outside of Hong Kong (except in certain occupations such as civil servants or crew members of an airline) you would be exempt from salaries tax under that year of assessment. Further, income from services less than 60 days in Hong Kong would also be exempt from Hong Kong taxes. The nature of your trip, whether for “visit” or business, would be assessed by the IRD based on the documentation provided.
If you have already been taxed for parts of your income in another territory during the year of assessment, you may claim a partial exemption from Hong Kong salaries tax. In this case, the IRD would request documentation of taxation payments in this territory, along with other information provided.
Here are some of the categories for income under the personal tax in Hong Kong
- Salary, employment wages, and director’s remuneration
- Bonuses, commission income, and leave paid from company
- Employment termination payments and retirement benefits, such as MPF
- Pensions
- Company stock awards or stock options from the company
- Rental compensation from the property provided by the employer
There may be other forms of income in addition to this which may apply for individuals if receive a form of compensation or payment. Check out the IRD website for further information regarding all forms of income.
Employer’s Return (ER) from your company
For most individuals, the salary payments from their employers will constitute the majority of the total income generated over the year. Like any country around the world, the businesses in Hong Kong would have to file the total annual salary for each individual and retirement payments as MPF for each employee. This income is recorded in the Employer’s Return (ER) for each company, as must be filed for each company shortly after the fiscal year end in April or May.
Once the Employer’s Return has been submitted by the company to the IRD, a copy would also be provided to the employer, in which the figures would be used to file their own personal tax form. It is important for people working in Hong Kong to refer to their Employer’s Return when filing their personal salary tax figure, as the IRD will also refer to this submitted form when reviewing the total taxes payable for each individual.
Tax Treatment of Employer Benefits
Most employer benefits and gains are taxable under Hong Kong regulations. This includes your benefits, which were paid to you or granted to you in respect to your employment.
Below are some examples of benefits:
- Education benefits
- Meal allowance
- Share awards and share options
- Accommodation and housing allowance
- Company gifts
Note: Particular non-cash benefits may be taxed using special rates and formulas. Please refer to the IRD website for further details on these benefits.
Strategic Deductions for 2026
- These are some allowable deductions that you may claim as expenses throughout the year:
- Self-education expenses
- Payments to a Mandatory Provident Fund Scheme (MPF) or a recognized retirement scheme.
- Charitable donations to approved organizations
- Expenses are qualified for your employment as certain business travel expenses, entertainment expenses, or other fees to professional organizations and associations.
- Elderly residential care expenses.
- Home loan interest
Here are the maximum limits you can take for these deductions during the year:
| Year of Assessment | 2024/2025 $ | 2025/2026 $ | 2026/2027 onwards $ | |
|---|---|---|---|---|
| Self education expenses | 100,000 | 100,000 | 100,000 | |
| Elderly Residential Care expenses | 100,000 | 100,000 | 110,000 | |
| Home Loan interest (Basic) | 100,000 | 100,000 | 100,000 | |
| Home Loan interest (Additional) | 20,000 | 20,000 | ||
| MPF contributions | 18,000 | 18,000 | 18,000 | |
| Qualifying premiums under VHIS policy | 8,000 (per insured) | 8,000 (per insured) | 8,000 (per insured) | |
| Qualifying annuity premium for tax deductible MPF contributions | 60,000 | 60,000 | 60,000 | |
| Approved charitable donations | 35% | 35% | 35% | |
| Domestic Rents (Basic) | 100,000 | 100,000 | 100,000 | |
| Domestic Rents (Additional) | 20,000 | 20,000 | 20,000 | |
| Assisted Reproductive Service Expenses | 100,000 (New deduction) | 100,000 | 100,000 |
These expenses would reduce your overall taxable income and would need to be included if applicable when filing your personal tax returns.
Filing Personal Tax Return and Hong Kong salaries tax
Taxpayers in Hong Kong must file an annual tax return to the Inland Revenue Department (IRD). In Hong Kong, the year of assessment is from April 1st until the preceding March 31st of the following year. The IRD will normally issue the individual tax returns by May 1st for taxpayers who need to be filed and submitted within one month from the date of issuance. Even if there was no income earned during the year, the tax form still needs to be declared as zero income for the taxpayer.
After the tax form is completed and submitted to the IRD, the IRD will assess if there are any taxes to be paid, and send a tax demand note to the taxpayer. If the taxpayer disagrees with the calculation of taxes payable, they may send an objection letter within 30 days to the IRD, stating the reasons for the objection. In cases where taxes payable are settled after the due date, the IRD may impose penalties on the individual.
A married couple may elect to file their tax return under joint assessment, which may be beneficial under the higher joint tax allowance and could lower tax liabilities. For sole-proprietors of a business, any assessable profits must be filed within the individual return, and filing can be extended up to 3 months from the issuance date.
Contact Startupr if you have any questions regarding your Hong Kong salary tax or personal tax forms. We offer assistance and consultation for taxation matters and other information regarding corporate taxation, personal taxation, and company formation. Feel free to get in touch with us for further information.
Last update: March 2025
