Hong Kong Salaries Tax: Allowances & Filing Guide

Salaries Tax: how is it calculated? How much do you need to earn before paying tax? What is the basic allowance amount, and how do a family, children, or other deductions affect the calculation? This article explains Hong Kong Salaries Tax Rates step by step, helping employees and first-time taxpayers calculate tax accurately and avoid paying too much.

What Is Salaries Tax？

If you are employed and perform your duties in Hong Kong and your income exceeds your allowance, you need to pay the relevant year’s Salaries Tax.

For this year of assessment, the basic personal allowance is HK$132,000. If your annual salary exceeds this amount, you will receive a tax bill. The actual tax payable depends on the relief available to you, as explained below.

When Will I Receive a Tax Return?

The IRD generally issues tax returns on the first working day of May each year.

Salaries Tax Calculation Guide

Hong Kong Salaries Tax has two calculation methods: applying progressive rates to net chargeable income for the year of assessment, or applying standard rates to net income. The lower of the two amounts is charged.

1. Progressive Rates

When using progressive rates, tax on net chargeable income is calculated using progressive rates.

Net chargeable income is calculated as follows:

Net chargeable income = total income – total deductions – total allowances

This year’s progressive rates are:

Net chargeable income	rates	Tax
First HK$50,000	2%	HK$1,000
Next HK$50,000	6%	HK$3,000
Next HK$50,000	10%	HK$5,000
Next HK$50,000	14%	HK$7,000
Remainder	17%	Depends on income

2. Standard Rates

When using standard rates, net income is multiplied by the standard rates.

Net income is calculated as follows:

Net income = total income – total deductions
Tax at the standard rate = net income × standard rates

For 24/25, the calculation changes to two-tiered standard rates: the first HK$5,000,000 of net income is subject to 15%rates, with 16% charged on the excess.

Worked Example

Mr A earns HK$600,000 a year, has no additional income, and claims only the basic allowance.

1. Same Income, Progressive Rates

Income	$600,000
Deduction: MPF contributions	$1,500 X 12 months = $18,000
Net income	$582,000
Deduction: basic allowance	$132,000
Total income	$450,000
Tax on the first 200,000 of income	$16,000
Tax payable on the remaining income	($450,000-$200,000) X 17% =$42,500
Total tax	$16,000+42,500 = $58,500

2. Same Income, Standard Rates

Income	$600,000
Deduction: MPF contributions	$1,500 X 12 months = $18,000
Net income	$582,000
Total tax	$582,000 X 15% =$87,300

You can also try the IRD’s Salaries Tax Calculator. Enter your income and the relevant details to calculate the total tax.

Salaries Tax Allowances/ Tax Relief

Salaries Tax Allowances

In addition to the annual basic allowance, the government also provides other types of allowance, as follows:

Basic allowance	$132,000
Married person’s allowance	$264,000
1st to 9th child allowance	$130,000 for each child
In the year of assessment in which each child is born, the child allowance is increased by an additional amount	$130,000
Dependent brother or sister allowance	$37,500
Dependent parent or grandparent allowance	$25,000 for each dependant aged 55 or above but under 60 $50,000 for each dependant aged 60 or above $50,000 for each dependant under 60 who is eligible to claim an allowance under the Government’s Disability Allowance Scheme
Additional dependent parent or grandparent allowance	HK$25,000 for each dependant aged 55 or above but under 60 HK$50,000 for each dependant aged 60 or above 50,000 for each dependant under 60 who is eligible to claim an allowance under the Government’s Disability Allowance Scheme
Single parent allowance	$132,000
Disabled dependant allowance	$75,000
Personal disability allowance	$75,000
One-off reduction of all Salaries Tax for the 2024/25 year of assessment	$1,500

Tax Deductions

Approved charitable donations	The maximum deduction is the lower of annual income after deductible expenses and depreciation allowances, or 35% of assessable profits.
Elderly residential care expenses	Maximum: $100,000
Home loan interest	Basic: $100,000; additional: $20,000
Mandatory employee contributions to MPF schemes	Maximum: $18,000
Contributions to recognised occupational retirement schemes	Maximum: $18,000
Qualifying premiums under the Voluntary Health Insurance Scheme	Taxpayers may claim a deduction of up to $8,000 for each insured person
Qualifying annuity premiums and tax-deductible MPF voluntary contributions	Combined maximum deduction: $60,000
Domestic rent deduction	Basic: $100,000; additional: $20,000
Assisted reproductive service expenses	Maximum: $100,000
One-off reduction of all Salaries Tax for the 2024/25 year of assessment	Maximum of $1,500 per case

How to Pay Salaries Tax？

The IRD offers several ways to pay tax. Local taxpayers can complete the process without visiting the IRD in person, using convenient payment channels such as online banking, PPS, the Faster Payment System (FPS), ATMs, or credit cards.

Worried About Miscalculating and Paying Too Much Tax?

Professional help with accurate calculations and available deductions may save you a substantial amount of tax. M & N Business provides professional tax filing assistance to calculate your tax accurately, reduce uncertainty, and help avoid overpayment. Our services offer the following benefits:

1. Save Time

M & N provides comprehensive tax filing services, including tax advice, bookkeeping, audit arrangements, and submission of company Profits Tax returns to the IRD, helping businesses complete compliant filings efficiently without the stress of complex procedures.

2. Understand Your Needs

As a professional tax filing service provider, we understand the challenges companies face. Our team follows the entire process through to completion, helping your company meet statutory filing requirements.

3. Clear Fees

M & N provides clear and transparent tax filing fees, with fair, reasonable pricing and no hidden charges.

Frequently Asked Questions

What Is the Difference Between Salaries Tax and Personal Assessment?

Salaries Tax applies to employment income, while personal assessment allows taxpayers with multiple income sources, such as rental and self-employment income, to calculate tax on a combined basis. Taxpayers with salary income only do not need to consider personal assessment, as it is primarily intended for people with business profits or losses, or rental income.

Do I Need to File a Tax Return for My First Job?

You have a filing obligation if income for the year of assessment exceeds the basic allowance. For example, even if you graduate in June and only start work in November, you must report income earned from 1 November 2023 to 31 March 2024 to the IRD.

What Period Does a Year of Assessment Cover?

A year of assessment runs from 1 April each year to 31 March of the following year.

How Much Annual Salary Makes Tax Payable?

People earning around $150,000 or more a year may need to file a return and pay tax, depending on their deductions and allowances.