Understanding how Hong Kong salaries tax works doesn’t need to be stressful. Think of it like learning the rules of a simple game: once you know how income, deductions and allowances fit together, the rest becomes straightforward.
This guide will walk you through the basics of salaries tax (sometimes called individual tax, personal tax or personal income tax in Hong Kong), explain the latest rates and allowances, and show real examples of how much you might need to pay. We’ll also give you access to our Salaries Tax Calculator, so you can estimate your own numbers quickly and clearly.
What is Salaries Tax in Hong Kong?
In simple terms, salaries tax (薪俸稅）is Hong Kong’s version of income tax for individuals. It applies to employment income, income from directorships, and pensions. Some people think of it as “tax on salaries” or “personal income tax” — all of these refer to the same thing.
What makes Hong Kong stand out is its territorial system. In general, you only pay tax on income sourced in Hong Kong. Salaries earned elsewhere, overseas investments, and capital gains earned by individuals are not taxed locally. That keeps things simpler compared with many other countries.
Each year of assessment runs from 1 April to 31 March. So for your work between April 2025 and March 2026, you are taxed in the 2025/26 year of assessment.
Who Needs to Pay Salaries Tax & When?
If you earn income from employment or office in Hong Kong — whether you are a resident or not — you’ll likely need to pay salaries tax. Even visiting employees may need to file, though there are exemptions for very short stays (such as not more than 60 days).
Timeline at a glance (In general):
- May: IRD sends individual tax returns (Form BIR60).
- One month later: Deadline to file (extensions possible online and / or the tax returns being handled by a tax representative)
- Aug–Nov: Notice of Assessment is issued.
- Jan and Apr (Following Year): Payment deadlines for final tax and provisional tax.
Think of it like a cycle: file your return in summer, wait for your bill in autumn, and pay early the next year.
How Salaries Tax is Calculated
- Assessable income – This includes salary, directors’ fees, bonus, allowances, housing benefits, etc.
- Minus deductions – Things like MPF contributions, approved donations, self‑education, domestic rent expenses, etc.
- Minus allowances – Basic allowance, married person allowance, child allowance, dependent parent allowance, etc.
- Apply rates – The government compares two calculations:
- Progressive rates (2% to 17% on sliding bands).
- Standard rates (15% up to $5M, 16% thereafter, on net assessable income before tax allowance).
You pay whichever is lower.
Hong Kong Salaries Tax Rates (2025/26)
Standard Rate: 15% on the first HK$5M net assessable income (before tax allowances), 16% on the remainder.
For example: If your net chargeable income is $350,000, the progressive rate means:
- 2% on first $50,000 = $1,000
- 6% on next $50,000 = $3,000
- 10% on next $50,000 = $5,000
- 14% on next $50,000 = $7,000
- 17% on the rest ($150,000) = $25,500
- Total = $41,500 tax payable.
Allowances and Deductions for Individuals (2025/26)
Common Allowances
- Basic Allowance: $132,000
- Married Person Allowance: $264,000
- Child Allowance: $130,000 (or $260,000 in year of birth)
- Dependent Parent/Grandparent Allowance: $25000–$100,000 depending on age & whether living continually with the parent / grandparent during the whole year.
- Disabled Dependant Allowance: $75,000
- Single Parent Allowance: $132,000
- Personal Disability Allowance: $75,000
Common Deductions
- MPF mandatory contributions – cap $18,000
- Tax Deductible Voluntary MPF Contributions + Annuity (combined cap $60,000)
- Premiums paid to Voluntary Health Insurance Scheme policy (VHIS) – cap $8,000 per each insured person
- Donations (max 35% of assessable income)
- Self‑education expenses (cap $100,000)
- Domestic rent (cap $100,000–120,000)
- Home loan interest (cap $100,000–120,000)
- Elderly residential care expenses (cap $100,000)
These deductions and allowances are like “discount coupons” on your taxable income — they reduce your bill, sometimes significantly.
The Calculation : How Much Salaries Tax Do You Pay?
Assumptions:
- Only deduction = MPF (max $18,000)
- Only allowance = Basic Allowance ($132,000)
- Using 2025/26 rates.
Example 1: Salary HK$500,000
- Income: $500,000
- Less MPF (capped): –$18,000 → Net Income = $482,000
- Less Basic Allowance: –$132,000 → Net Chargeable Income = $350,000
- Progressive Calculation:
- First $50,000 × 2% = $1,000
- Next $50,000 × 6% = $3,000
- Next $50,000 × 10% = $5,000
- Next $50,000 × 14% = $7,000
- Remaining $150,000 × 17% = $25,500
Total Tax = $41,500
So a $500,000 salary leads to around $41,500 salaries tax under progressive rates. The standard rate (15% of $482,000 = $72,300) is higher, so progressive wins.
Example 2: Salary HK$1,000,000
- Income: $1,000,000
- Less MPF (capped): –$18,000 → Net Income = $982,000
- Less Basic Allowance: –$132,000 → Net Chargeable Income = $850,000
- Progressive Calculation:
- First $50,000 × 2% = $1,000
- Next $50,000 × 6% = $3,000
- Next $50,000 × 10% = $5,000
- Next $50,000 × 14% = $7,000
- Remaining $650,000 × 17% = $110,500
Total Tax = $126,500
- Standard Rate Check:
Net Income ($982,000) × 15% = $147,300 → Since this is higher than $126,500, progressive rates apply.
So with a $1,000,000 salary, your salaries tax is around $126,500.
Salaries Tax – Quick Reference Table
Many people often ask: how much tax do you need to pay in Hong Kong if your annual salary is HK$ 300,000 – $1,000,000?
The table below gives you a quick estimate of your salaries tax. Please note, however, that the calculations are based on certain assumptions — namely a Mandatory Provident Fund (MPF) contribution of HK$ 18,000 and a Basic Allowance of HK$ 132,000.
| Annual Income | Net Income after MPF | Minus Basic Allowance | Net Chargeable Income | Progressive Tax Payable |
| $300,000 | $282,000 | – $132,000 | $150,000 | $9,000 |
| $400,000 | $382,000 | – $132,000 | $250,000 | $24,500 |
| $500,000 | $482,000 | – $132,000 | $350,000 | $41,500 |
| $600,000 | $582,000 | – $132,000 | $450,000 | $58,500 |
| $700,000 | $682,000 | – $132,000 | $550,000 | $75,500 |
| $800,000 | $782,000 | – $132,000 | $650,000 | $92,500 |
| $900,000 | $882,000 | – $132,000 | $750,000 | $109,500 |
| $1,000,000 | $982,000 | – $132,000 | $850,000 | $126,500 |
Salaries Tax vs Profits Tax: Quick Comparison
Understanding the difference between Salaries Tax and Profits Tax is key to managing your finances correctly in Hong Kong. Whether you’re an employee earning a monthly paycheck or running your own business, each tax type applies to different sources of income. Here’s a quick side-by-side comparison to help you see which one affects you.
Salaries Tax: applies to employment income (salary, bonuses, pensions). Progressive 2% ‑17%, or standard 15 -16%.
Profits Tax: applies to profits from business or self‑employment. Rates for limited companies: 8.25% on first $2M profits, then 16.5% on remaining.
So, Salaries Tax is like paying tax on your job’s paycheck ; Profits Tax is like paying tax on the “shop” or “business” you run yourself.
How to Estimate Using Our Calculator
Instead of manually applying deductions and rates, you can use our Salaries Tax Calculator （香港薪俸稅計算機）for 2025/26. Just input:
- Annual income and MPF contributions.
- Your allowances and deductions.
- Click Calculate Tax.
The calculator shows both separate and joint assessments, compares progressive vs standard rates, and picks the lower one — just like the IRD system.
When to Seek Professional Help
The calculator works great for straightforward cases. But real life can get messy: multiple jobs, property income, profits from sole proprietorship businesses, overseas assignments, non-taxable claim or certain income or benefits in kind. These need careful handling.
Our team at HKWJ Tax Law provides tailored support, especially for complex or cross‑border situations. If your situation feels more complicated than “basic salary + MPF”, we highly encourage you to reach out through our contact form.
Hong Kong may be famous for its simple tax regime, but even simple rules can trip you up. The good news? Once you grasp the basics — rates, allowances, timelines — it’s much easier to stay on top of things.
Use our free salaries tax calculator for quick estimates. And remember: when things get more complicated, professional tax advice makes all the difference.
