【2026 Tax Filing】How to calculate salary tax points? How much is the personal tax exemption, a summary of tax deduction items, and tax-saving strategies.
Salaries tax is levied at the lower of the progressive tax rate or the standard tax rate. The basic allowance for 2025/26 is HK$132,000, and the one-off reduction cap is HK$3,000; starting from 2026/27, multiple allowances will be increased, and utilizing allowances and deductible items can legally save tax.
Summary of key points
- The salaries tax assessment year runs from April 1 each year to March 31 of the following year, and the tax department will automatically calculate the lower tax amount using the progressive tax rate and the standard tax rate.
- The basic allowance for 2025/26 is HK$132,000, and the one-off salaries tax reduction cap is HK$3,000.
- Starting from 2026/27, multiple allowances will be increased: the basic allowance will rise to HK$145,000, and the married person's allowance will increase to HK$290,000.
- Tax savings rely on four strategies: budget tax measures, personal allowances, family member allowances, and deductible items.
What is salaries tax?
Salaries tax can be understood as the income tax for workers, with the assessment year running from April 1 each year to March 31 of the following year. Anyone employed in Hong Kong, serving as a company director, or receiving a pension may have to pay salaries tax on their relevant income. The tax department will calculate using both the progressive tax rate and the standard tax rate, charging you the lower amount without requiring you to choose.
Calculation of Salaries Tax
There are two methods for calculating salaries tax: one calculates based on "assessable income" at the progressive tax rate, while the other calculates based on "net income" at the standard tax rate.
Progressive tax rates (2025/26 year)
Assessable income (total income - total deductions - total allowances) × progressive tax rate
| Assessable income | tax rate | Tax amount |
|---|---|---|
| First HK$50,000 | 2% | HK$1,000 |
| Thereafter HK$50,000 | 6% | HK$3,000 |
| Thereafter HK$50,000 | 10% | HK$5,000 |
| Thereafter HK$50,000 | 14% | HK$7,000 |
| Remainder (i.e., the portion exceeding HK$200,000) | 17% | / |
Standard tax rate (two-tier system)
Net income (total income - total deductions) × standard tax rate. From the 2024/25 year onwards, a two-tier standard tax rate system will be implemented: net income of HK$5 million or below at 15%, and the portion exceeding HK$5 million at 16%.
| Net income | tax rate |
|---|---|
| HK$5 million or below | 15% |
| Above HK$5 million | First 5 million 15%, excess portion 16% |
1. If you have self-employment or rental income at the same time and want to combine taxation, you may consider "personal income tax," the calculation method is related toProfits tax filing guide2. the following, which we mentioned in the FAQ below.
3. In addition, if your salary tax in the previous year reached a certain amount, this year it will be collected together with the final assessment4. salary tax provisional tax.。
5. How can I save on taxes?
6. Salary tax savings mainly rely on four directions: one-time budget relief, personal allowances, family member allowances, and deductible items. The first three directly reduce the tax payable or taxable income, while the latter is deducted based on eligible actual expenses, and all four can be used simultaneously.
7. From the above calculation, it can be seen that to achieve savings, the focus is on the "total deductions" and "total allowances" sections. The available tax relief for this year generally has four directions:
- 8. One-time tax measures for the year (budget relief).
- 9. Personal allowances (obtained based on individual conditions).
- 10. Family member allowances (obtained based on dependent family conditions).
- 11. Deductible items (deducted based on actual expenses).
12. Tax-saving method one: Key salary tax measures in the 2026-27 budget.
13. 2026-27 Financial Budget.14. (Announced in February 2026,15. relevant legislation was published in the gazette on May 22, 2026.) There are several measures related to employees:16. One-time relief for 2025/26 salary tax.
- 17. : Relief of 100%, with a maximum of HK$3,000 per case, will be reflected in the final assessment for 2025/26; note that this relief18. does not apply to provisional tax.19. Starting from 2026/27, multiple allowances will be increased.。
- Increase in multiple tax exemptions starting from 2026/27The basic tax exemption amount increases from HK$132,000 to HK$145,000, the exemption amount for married persons increases from HK$264,000 to HK$290,000, and the exemption amount for single parents increases from HK$132,000 to HK$145,000.
- Maximum expenditure for elderly residential care: Starting from 2026/27, it will be raised from HK$100,000 to HK$110,000.
- Extension of additional tax exemption for newborns: Starting from 2026/27, an additional tax exemption can be enjoyed for the first two years after the birth of a child (equivalent to double the child tax exemption), applicable to children born on or after April 1, 2025.
💡 Longfeng reminds you: When filling out the 2025/26 tax return, just fill it out as usual; the tax department will automatically reflect the reduced and adjusted exemption amounts during the final assessment of 2025/26 and the provisional tax for 2026/27, without the need for separate application.
Tax Savings II: Personal Allowance
The basic tax exemption amount for 2025/26 is HK$132,000, increasing to HK$145,000 from 2026/27, automatically enjoyed by each taxpayer; eligible persons with disabilities can additionally claim a tax exemption of HK$75,000 for persons with disabilities, both can be used simultaneously.
Basic Allowance
The basic tax exemption amount (also known as the single person exemption) is available to every taxpayer. For the 2025/26 year, it is HK$132,000, meaning that if annual income does not reach HK$132,000, generally no tax is payable; it will be adjusted to HK$145,000 from the 2026/27 year.
| Tax Free Items | 2025/26 | 2026/27 |
|---|---|---|
| Basic Allowance | HK$132,000 | HK$145,000 |
Disabled Person's Allowance
Eligible recipients"Hong Kong Government Disability Allowance Scheme"Persons receiving allowances (including regular and higher disability allowances), even if they have not actually applied for the allowance, can also claim the tax exemption for persons with disabilities of HK$75,000. Proof of severe disability must be provided by the Director of Health or the Chief Executive of the Hospital Authority, with the condition lasting more than 6 months, requiring daily care from others, and not residing in government-subsidized institutions, etc.
Tax saving method 3: Family member allowances
Family member tax exemptions can be claimed based on dependency relationships, with the 2025/26 exemption amount for married persons at HK$264,000, HK$130,000 for each child, and HK$37,500 for each dependent sibling; among them, the conditions for married persons and dependent parents have more requirements.
If you have dependent family members, you can claim different family member tax exemptions based on relationships. Among themMarried Person's Allowance同Dependent Parent AllowanceDue to more conditions and involving combined tax returns and allocation arrangements, Longfeng has a complete topic breakdown, so we will first provide the key points here. (Content referenceHong Kong Inland Revenue Department Salaries Tax/Personal Income Tax Information）
Married Person's Allowance
Couples can file taxes individually or choose to file jointly; personal tax exemptions and married persons' tax exemptions cannot be used together.
The married persons' tax exemption amount for the 2025/26 year is HK$264,000, increasing to HK$290,000 from 2026/27.
As for which is better, filing jointly or separately, and how to calculate, seeComplete guide to married persons' tax exemption and combined tax filing
Dependent parent, grandparent allowance
Support for parents/grandparents/great-grandparents who are 55 years old or above and usually reside in Hong Kong can claim a tax exemption based on the age of the supported person (2025/26: HK$25,000 for each person aged 55 to 59, HK$50,000 for each person aged 60 or above); if they live with you for the entire year without requiring full financial support, an additional equivalent tax exemption can be claimed. The amounts will be adjusted starting from 2026/27. For detailed claim conditions, definitions of living together, and sharing arrangements, please refer toComplete claim conditions for tax exemption for supporting parents。
Child Allowance
Support for unmarried children who meet age or education criteria can be claimed. For the 2025/26 year, HK$130,000 for each child, increasing to HK$140,000 from 2026/27; an additional tax exemption can be claimed for the tax year in which the child is born. Starting from 2026/27, newborns will enjoy an additional tax exemption for the first two years after birth (equivalent to double), applicable to children born on or after April 1, 2025. The total child tax exemption can only be claimed by one party.
Claim conditions (meeting one of the following): under 18 years old; under 25 years old and receiving full-time education; or 18 years old or above but unable to work due to physical or mental issues.
Single Parent Allowance
If you are a single person for the entire tax year and are responsible for the care of your children, you can claim a single parent tax exemption (2025/26: HK$132,000; increasing to HK$145,000 from 2026/27). Please note that getting married, divorced, widowed, or living separately from your spouse during that year does not qualify for single parent status, and you must wait until the next tax year.
Dependent Brother/Sister Allowance
Support for unmarried siblings who meet age or education criteria can claim a tax exemption of HK$37,500, which can only be claimed by one person.
Disabled Dependant's Allowance
If you support a qualified relative receiving government disability allowance (spouse, child, parent, grandparent, great-grandparent, or sibling), you can additionally claim HK$75,000. This isan additionaltax exemption, which can still be applied for even if you have claimed the tax exemptions for other family members mentioned above.
Tax-saving method four: Personal deductible items
Deductible items are based on actual expenses, with common limits including voluntary medical insurance of HK$8,000 per insured person, eligible annuity and MPF voluntary contributions totaling HK$60,000, and personal education expenses of HK$100,000; mortgage interest and residential rent can only be chosen one or the other.
In addition to tax exemptions, eligible actual expenses can also be deducted under salary tax and personal income tax. The following are the main deductible items and limits for the 2025/26 year:
| Deductible items | Tax deduction ceiling |
|---|---|
| Recognized charitable donations (not less than HK$100 each time) | Assessable income or profits of 35% |
| Premiums for voluntary medical insurance plans(per insured person) | HK$8,000 |
| Eligible Annuity Premiums and Tax Deductible MPF Voluntary Contributions | HK$60,000 |
| Expenditure on self-education | HK$100,000 |
| Mandatory contributions to MPF or recognized occupational retirement scheme contributions | HK$18,000 |
| Mortgage interest (basic + eligible additional) | HK$100,000 + HK$20,000 |
| Expenditure on residential care for the elderly (per elderly person) | HK$100,000 (increasing to HK$110,000 from 2026/27) |
| Residential rent (basic + eligible additional) | HK$100,000 + HK$20,000 |
| Expenditure on assisted reproduction services | HK$100,000 |
Several key supplementary points:
- Charitable donations: Donations to approved charitable organizations under Section 88 of the Inland Revenue Ordinance can be deducted first; after reaching my limit, the spouse can claim the remaining portion.
- Mandatory Provident Fund contributions: The limits for mandatory and voluntary contributions do not overlap, and it is important to distinguish them when calculating. For details on how to calculate contribution limits, refer toMPF contribution limits and tax deductions。
- Mortgage interest vs residential rent: Only one of the two can be chosen; homeowners can deduct interest, while tenants can deduct rent.
What are the differences in tax reporting for self-employed, part-time workers, and directors?
If income is below the basic exemption amount HK$132,000, generally no tax is payable, but as long as you receive a tax return, you must report it; do not assume that you do not need to report just because you do not owe tax.
The business profits of self-employed individuals fall under the profits tax category, which differs from the salary tax calculation method for employees; there are differences in reporting methods and deductible expenses, see detailsTax reporting tutorial for self-employed individuals/Freelancers。
Overview of personal taxation topics
We have organized an overview of personal taxation here; if you want to delve into a specific topic, you can jump directly to the corresponding section:
- Complete claim conditions for tax exemption for supporting parents——Definition of cohabitation, age classification, and breakdown of sharing arrangements
- Tax exemption for married individuals and joint assessment——Which is more beneficial, joint or separate assessment?
- Tax reporting tutorial for self-employed individuals/Freelancers——Determining self-employed status and reporting process
- Calculation of provisional salary tax——How to calculate provisional tax and whether it is possible to apply for deferment
If you need assistance with tax filing services, feel free to refer to Longfeng Tax Filing Services。
Frequently Asked Questions
When will the tax return form be received?
The personal tax return form (BIR60) is generally issued by the tax authority on the first working day of May each year and must be completed and returned within one month from the date of issuance.
If you do not receive the tax return form, does it mean you do not need to file taxes or pay taxes?
No. If you know you need to pay taxes but have not received the tax return form, you must notify the tax authority after the end of the tax year (i.e., before July 31 of the following year). You can inquire by phone, in person at the tax office, or through the "Tax Easy" platform.
What should I do if I fill out the tax return exemption amount incorrectly or leave it blank?
You can submit a written request for modification to the assessor before receiving the assessment notice; fill out the IR831 form for correction after receiving the assessment notice; and submit a written request for correction to the tax office after payment.
Can personal income tax be saved? Which is more applicable?
Personal income tax is a method of assessment that combines salary, business profits/losses, and rental income. If you do not have other businesses or rental properties, you generally do not need to consider it; if you have self-employment or rental income, you can compare which calculation method is more tax-efficient, seeProfits tax filing guide。
Do married individuals benefit more from tax consolidation?
Not necessarily. When one party's income is below the basic exemption amount, combined assessment may be higher. The tax authority will actually automatically calculate the method that results in less tax for you, so you don't have to worry about choosing incorrectly. For detailed comparisons, seeTax exemption for married individuals and joint assessment。
What are the consequences of submitting a tax return late?
Late submission may result in fines and prosecution, and you will lose exemptions and deductions (such as MPF contributions and approved charitable donations), leaving only the basic exemption amount, which is not worth the loss.
How to pay salaries tax?
You can choose to pay in person at the tax office, through online banking, PPS, FPS, ATMs, or credit cards.
Conclusion
Understand the key points for the 2025/26 tax filing and the four major tax-saving directions, so you can respond calmly during the tax season. Remember to return the tax return form within one month from the date of issuance to avoid affecting your exemption amount. If you want more tailored advice on tax planning, combined filing, or deductible items, you can hand it over to Longfeng Business Consultants' tax filing team for follow-up—learn moreLongfeng Tax Filing Services, or contact us directly via WhatsApp.
Latest update date: May 2026