Combined salaries tax saving across VHIS and QDAP premiums.
Combined tax saving
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VHIS deductible
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QDAP deductible
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Total deductible
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Your breakdown
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Two very different products, one tax return
Hong Kong rewards certain insurance purchases by letting their premiums reduce your assessable income for salaries tax. This calculator handles the two that most salaried residents can claim: premiums under the Voluntary Health Insurance Scheme, known as VHIS, and qualifying deferred annuity premiums, known as QDAP. They work on completely different caps, which is exactly why a combined tool is useful. VHIS is capped per insured person, so a family can multiply the relief across members; QDAP sits under a single shared ceiling with tax-deductible MPF voluntary contributions. The tool deducts each within its own limit, adds them, and multiplies by your marginal band to show one combined saving.
It is aimed at people already paying these premiums who want to know the after-tax cost, and at anyone deciding how much annuity premium is worth topping up to. Because the benefit is a deduction rather than a credit, its size depends on your tax band: the higher your top slice of income, the more each deductible dollar is worth.
How the per-person and shared caps interact
VHIS premiums are deductible up to $8,000 per insured person each year, the limit this calculator applies. Insure yourself plus two family members and the headroom is three times that. QDAP premiums share a combined annual cap of $60,000 with MPF tax-deductible voluntary contributions, so if you are already making large voluntary MPF top-ups, less QDAP room remains. Treat the $8,000 and $60,000 figures as the calculator's working assumptions and confirm the current limits with the Inland Revenue Department and the MPFA, since these are policy levers that can change at a Budget.
Two members on VHIS plus a full annuity, at the top band
Take the defaults. The VHIS premium is $9,000 per person, but the deduction is capped at $8,000, and there are two insured persons, giving $16,000 of VHIS relief. The QDAP premium is $60,000, exactly at the cap, so all $60,000 counts. The total deductible is $76,000, and at the 17 percent marginal band the rate this calculator applies, the combined saving is $12,920.
Notice the $1,000 of VHIS premium above the per-person cap that simply does not count. Paying more than $8,000 per person buys more health cover, but not more tax relief.
Where this saving sits in the bigger picture
These deductions are part of a larger menu the Inland Revenue Department offers, alongside home loan interest, domestic rent, self-education, and approved charitable donations. They all work the same way: they cut the income on which progressive salaries tax is charged, and the bill is ultimately capped at the standard rate on your net total income. There is no separate insurance premium tax in Hong Kong, no GST on the premiums, and the growth inside a deferred annuity is not hit by a capital gains tax, which is part of what makes QDAP attractive as a retirement vehicle. The annuity is a long commitment, though, so the tax break should be a bonus, not the whole reason to buy.
A common mistake is double-counting the annuity room. If you already claim MPF tax-deductible voluntary contributions, those eat into the same $60,000 ceiling QDAP uses, so the combined deduction cannot exceed it. Add your voluntary MPF figure to your QDAP premium when checking whether you are over the line.
Can I claim VHIS premiums I pay for my parents?
Generally yes, where you pay qualifying VHIS premiums for specified relatives such as your parents or children, each insured person carries their own deduction up to the per-person cap. That is why insuring several family members can multiply the relief. Confirm exactly which relatives qualify and what counts as a certified VHIS plan with the Inland Revenue Department before relying on it.
Is the deduction worth it if I am in a low tax band?
The relief shrinks with your band. At 2 percent, $76,000 of deductible premiums saves only $1,520, against $12,920 at 17 percent. The insurance may still be worth buying on its own merits, but if you are in a low band, do not let the tax saving alone justify topping up an annuity. Run your actual marginal rate here to see the real benefit.