salaries taxWhat do you think?How much of your annual salary is taxable?? Basically.Tax AllowanceHow many? What if there are family, children or other tax deductions? In this article, we'll take a step-by-step look at Hong Kong's tax deductions.Salaries tax rateWhether you are a wage earner or a novice filing tax return for the first time, you can easily master the practical tax calculation skills and avoid overpayment of tax by making accurate calculations.
What issalaries tax？
If employed and performing duties in Hong Kong with an income exceedingTax AllowanceIn the case of a taxable year, the taxpayer is required to pay a taxable amount of HK$1,000,000 for the year of assessment.salaries tax。
For the current tax yearPersonal Basic Allowance為HK$132,000, if your annual salary exceeds this amount, you will receive a tax bill. The actual amount of tax payable will depend on how much tax relief you are entitled to, as explained in more detail below.
When will I receive my tax return?
The Inland Revenue Department (IRD) normally issues tax returns on the first working day of May each year.
Calculation of Salaries TaxTeaching
Hong Kongsalaries taxThere are two typesCalculationThe method is to use a graduated scale based on the taxable income for the year of assessment.tax rateor on the basis of net income, in accordance with standardizedtax rateCalculation. The lower of the two options will be selected for collection of the duty
1. Progressiveduty rate
If you choose to press the Progressivetax rateTaxation will be based on the actual amount of your taxable income and will be calculated on a progressive basis.tax rateCalculate.
The actual amount of chargeable income is calculated as follows:
Actual taxable income = Total income - Total deductions - Total allowances
Accumulation for the yeartax rateFor:
Actual taxable income | tax rate | tax payments |
First HK$50,000 | 2% | HK$1,000 |
Subsequently HK$5 million | 6% | HK$3,000 |
Subsequently HK$5 million | 10% | HK$5,000 |
Subsequently HK$5 million | 14% | HK$7,000 |
Balance | 17% | Depends on income |
2. Standardsduty rate
If you choose to follow the standardtax rateFor tax purposes, it will be based on your net income, multiplied by the standardtax rateTo do the math.
Net income is calculated as follows:
- Net Income = Gross Income - Gross Deductions
- Standard Tax = Net Income × Standardtax rate
It is worth noting that in 24/25, the tax system will be adjusted to a two-tier scaletax rate: 15% applies to the first $5 million of net incometax rateIn the event that the amount exceeds 161 TP3T, a levy of 161 TP3T will be imposed.
Calculation example reference
Mr. A has an annual income of HK$600,000 and does not have any additional source of income and is only entitled to the Basic Rate.Tax Allowance。
1. Same income, progressive usageduty rate
earnings | $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 |
First $200,000 of income tax | $16,000 |
Tax on balances payable | ($450,000-$200,000) X 17% = $42,500 |
Total Taxes | $16,000+42,500 = $58,500 |
2. Same income, standardized useduty rate
earnings | $600,000 |
Deduction: MPF contributions | $1,500 X 12 months = $18,000 |
Net Income | $582,000 |
Total Taxes | $582,000 X 15% = $87,300 |
If you are interested in doing the calculations, you may also try the IRD'sSalaries Tax CalculatorIn order to determine the total amount of tax, you need to enter your income and other relevant information.
Salaries tax allowances/Tax Concessions
Salaries tax allowances
In addition to the basic annualTax AllowanceIn addition, the Government also has other kinds ofTax AllowanceThe details are as follows:
fundamentalTax Allowance | $132,000 |
married personTax Allowance | $264,000 |
1st to 9th childTax Allowance | $130,000 each |
In the tax year in which each child was born, the childTax AllowanceAdditional Increase | $130,000 |
Provision for Brothers and SistersTax Allowance | $37,500 |
Dependent Parents, Grandparents, GrandparentsTax Allowance |
|
Additional Dependent Parents, Grandparents, and GrandparentsTax Allowance |
|
Single Parent Tax Exemption | $132,000 |
Disabled Dependants Exemption | $75,000 |
Tax exemption for disabled persons | $75,000 |
One-off reduction of 100% of salaries tax for the year of assessment 2024/25 | $1,500 |
Deductible items
Recognized Charitable Donations | The maximum amount deductible is the lesser of deductible expenses and depreciation allowances deducted from gross income for the year, or 35% of taxable profits. |
Deduction for elderly residential care expenses | Capped at $100,000 |
Home loan interest deduction | Basic: $100,000; Additional: $20,000 |
Mandatory Employee Contributions to MPF Schemes | Capped at $18,000 |
Contributions to Recognized Occupational Retirement Schemes | Capped at $18,000 |
Eligible Premiums for the Voluntary Health Protection Scheme (VHPS) | Taxpayer can claim tax deduction for each insured person up to a maximum of $8,000 |
Eligible Annuity Premiums and Tax Deductible MPF Voluntary Contributions | The combined maximum deduction is $60,000. |
Deduction for residential rent | Basic: $100,000; Additional: $20,000 |
Expenditure on assisted reproduction services | Capped at $100,000 |
One-off tax relief of 100% of salaries tax for the year of assessment 2024/25 | Limit $1,500 per case |
How to paysalaries tax？
The Inland Revenue Department (IRD) offers a wide range of tax payment methods. Local taxpayers can easily complete the tax return filing process without the need to visit the IRD in person, as a wide range of remote payment methods are now available, including Internet banking, Payment by Phone Service (PPS), Flexi-Payment Service (FPS), Automatic Teller Machines (ATMs), or credit card channels, which are convenient and efficient.
Afraid to pay more tax due to wrong counting?
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Frequently Asked Questions
salaries taxIt applies to income from employment, whereas Personal Assessment allows taxpayers with multiple incomes, e.g. property rental income, self-employment income, to combine their incomes for tax purposes. If a taxpayer has only salary income, he/she does not need to consider Personal Assessment as the system is mainly for those who have business profits and losses or property rental income.
As long as your income in the year of assessment exceeds the basic allowance, you are liable to file a tax return. For example, even if you graduated in June and started your employment in November, you are still required to report income earned between November 1, 2023 and March 31, 2024 to the IRD.
A year of assessment is a financial period that begins on April 1 of each year and ends on March 31 of the following year.
Those earning more than $$150,000 a year may be required to file tax returns and pay tax, depending on the actual deductions and exemptions.
References:
Hong Kong Government's one-stop-shop on "Profitability of Salaries Tax and Taxation on Personal Assessment
https://www.gov.hk/tc/residents/taxes/etax/services/tax_computation.htm
Inland Revenue Department, Payment Methods, 2024.
https://www.ird.gov.hk/chi/tax/pay_pme.htm
GovHK, Tax Allowances, 2025.
https://www.gov.hk/tc/residents/taxes/salaries/allowances/allowances/7years.htm
Hong Kong Government One-Stop Shop, Rates of Salaries Tax and Tax under Personal Assessment, 2025.
https://www.gov.hk/tc/residents/taxes/taxfiling/taxrates/salariesrates.htm
GovHK, "Does Personal Assessment Reduce Taxation Burden," 2025.
https://www.gov.hk/tc/residents/taxes/salaries/personal/personalreduction/personalassessment.htm
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