Hong Kong Salaries Tax 2025/26: Rates, Allowances and How It Works
Hong Kong's salaries tax is one of the lightest personal income taxes in the developed world: no tax on worldwide income, a top effective rate most earners never reach, and no VAT, GST or sales tax on top. If you work in Hong Kong β whether as an employee or an office-holder β this guide walks through the 2025/26 year of assessment (income earned 1 April 2025 to 31 March 2026): the progressive rates, the two-tiered standard rate, the allowances that shrink your bill, and the provisional tax system that surprises newcomers.
How salaries tax works
Salaries tax is charged on income arising in or derived from Hong Kong from an office or employment. Hong Kong taxes on a territorial basis: only your Hong Kong employment income is chargeable. Foreign-source income is not taxed in Hong Kong, even if you remit it here.
Your tax is computed two ways and the Inland Revenue Department (IRD) automatically charges whichever is lower:
- Progressive rates on net chargeable income (income minus deductions minus allowances)
- Standard rate on net income (income minus deductions only, no allowances)
You never have to choose β the IRD runs both calculations for you.
Progressive rates for 2025/26
The progressive rates apply to net chargeable income in bands of HK$50,000:
| Net chargeable income | Rate |
|---|---|
| First HK$50,000 | 2% |
| Next HK$50,000 | 6% |
| Next HK$50,000 | 10% |
| Next HK$50,000 | 14% |
| Remainder | 17% |
So the first HK$200,000 of net chargeable income attracts HK$16,000 of tax (1,000 + 3,000 + 5,000 + 7,000), and only income above HK$200,000 is taxed at 17%.
The two-tiered standard rate
Since the 2024/25 year of assessment, the standard rate has two tiers:
| Net income (no allowances) | Rate |
|---|---|
| First HK$5,000,000 | 15% |
| Remainder | 16% |
The standard rate only bites high earners whose allowances are small relative to income. For most employees, the progressive computation produces the lower bill.
Allowances for 2025/26
Allowances are deducted before the progressive rates apply. The main ones for 2025/26:
| Allowance | Amount (HK$) |
|---|---|
| Basic allowance | 132,000 |
| Married person's allowance | 264,000 |
| Child allowance (each, 1stβ9th child) | 130,000 |
| Additional child allowance (year of birth) | 130,000 extra |
| Dependent parent/grandparent (aged 60+, not residing with you) | 50,000 |
| Dependent parent/grandparent (aged 60+, residing with you) | 100,000 |
| Dependent parent/grandparent (aged 55β59) | 25,000 / 50,000 |
| Single parent allowance | 132,000 |
| Disabled dependant allowance | 75,000 |
Note: the 2026β27 Budget raised the basic allowance to HK$145,000 starting from the 2026/27 year of assessment. For 2025/26 it remains HK$132,000 β roughly HK$11,000 a month of income that attracts no tax at all.
Deductions that reduce your taxable income
Before allowances, you can deduct:
- Mandatory MPF contributions: 5% of your relevant income, capped at HK$1,500 per month (the maximum relevant income level is HK$30,000 per month). Employees earning below HK$7,100 a month are not required to contribute, but the employer still contributes 5%.
- Voluntary MPF (TVC) and qualifying annuity premiums: deductible up to HK$60,000 per year combined.
- Charitable donations: to approved charities, up to 35% of assessable income.
- Home loan interest: up to HK$100,000 per year (20 years of entitlement in total, not necessarily consecutive).
- Elderly residential care expenses: up to HK$100,000 per year for a parent/grandparent.
- Self-education expenses: up to HK$100,000 per year.
A worked example
A single employee earns HK$600,000 in 2025/26 and contributes the maximum MPF of HK$18,000 (12 Γ 1,500):
| Step | Amount (HK$) |
|---|---|
| Employment income | 600,000 |
| Less: MPF deduction | (18,000) |
| Net income | 582,000 |
| Less: basic allowance | (132,000) |
| Net chargeable income | 450,000 |
| Tax at progressive rates | 16,000 + 250,000 Γ 17% = 58,500 |
Check against the standard rate: 582,000 Γ 15% = 87,300. The progressive computation (HK$58,000 after rounding down to the nearest dollar β the IRD ignores cents) is lower, so that is what is charged. Effective rate: under 10%.
Provisional salaries tax: the newcomer's surprise
Hong Kong collects tax in advance. Once you have been assessed, each year's bill includes:
- Final tax for the year just ended, plus
- Provisional tax for the current year, estimated from last year's income
Provisional tax is normally payable in two instalments β about 75% in January and 25% in April. So your first full assessment can feel like paying almost two years of tax at once. If your income will fall by more than 10% this year (job change, retirement, leaving Hong Kong), you can apply to hold over (defer or reduce) the provisional tax β apply in writing with evidence before the payment due date.
No VAT, GST or sales tax
Hong Kong levies no value-added tax, goods and services tax, or general sales tax. What you earn is reduced only by salaries tax (and MPF), and what you spend carries no consumption tax. This is a major reason the overall tax burden feels light compared with most developed economies.
Filing basics
- The IRD issues individual tax returns (BIR60) on the first working day of April each year.
- File within one month of issue (eTax electronic filing gives an automatic one-month extension).
- Keep employment records, MPF statements and receipts for deductions for at least 7 years.
Next steps
- Check your MPF statements β your mandatory contributions are deductible, and many newcomers forget to claim them.
- Model both computations if your income is high β near HK$5 million of net income the standard rate can become relevant.
- Plan for provisional tax in your first year β set aside roughly double the expected bill.
- If you also work across the border, read our guide to MainlandβHong Kong cross-border tax: the 183-day rule and the Greater Bay Area 15% subsidy can materially change what you owe.