Hong Kong Provisional Salaries Tax Calculator

Why your first salaries-tax bill is the largest

Salaries tax in Hong Kong is not deducted from your pay each month. It is assessed after the year ends, and the Inland Revenue Department asks for two things at once: the final tax on the year that has just finished, and a provisional tax for the year ahead, estimated from the same income. New arrivals and first-time taxpayers often find the opening demand jarring, because it bundles a settled liability with a prepayment. The provisional tax is paid in two instalments and is later set off against next year's actual bill, so it is not lost. This tool mirrors the demand by adding the final tax for your stated income to the provisional tax for the coming year, and it lets you flex next year's income up or down to see how the provisional half responds.

The reduction that does not reach the provisional half

Here is the detail that trips people up. Hong Kong often announces a one-off Budget reduction in salaries tax, and as modelled here that reduction is 100 percent of the tax capped at $3,000 per case. But the concession normally applies only to the final tax for the year it covers, not to the provisional tax for the year ahead. So your provisional figure is computed on the raw lower-of-two-methods basis with no reduction subtracted, which is why it can come out slightly higher than the final tax even when your income is unchanged. The final tax uses the progressive scale or the standard rate, whichever is lower, then subtracts the reduction; the provisional uses the same lower-of comparison but stops there. Treat the reduction amount and cap as the calculator's 2025/26 assumption and confirm both with the IRD, since each Budget sets them afresh.

A $600,000 income, final plus provisional

Take the defaults: net total income of $600,000, allowances of $132,000, and no expected change next year. Net chargeable income is $468,000. The progressive tax on that is $61,560, which is lower than the standard rate of $90,000 on the full income, so it governs. The final tax subtracts the $3,000 reduction, leaving $58,560. The provisional tax repeats the lower-of comparison on the same income but with no reduction, so it stays at $61,560. The total demand is $120,120. The provisional half is the larger of the two purely because the Budget reduction did not apply to it.

When to ask for a holdover

If your income is about to drop, you do not have to pay provisional tax pitched at last year's level. You can apply to hold over all or part of it where your net chargeable income for the coming year is likely to be less than 90 percent of the amount assessed, for instance after a job change, a move to part-time work, or leaving Hong Kong partway through the year. The application has a firm deadline, generally at least 28 days before the second instalment is due, so set a reminder. The practical tip is to use the income-change input on this tool to estimate the lower provisional figure, then quote that expectation when you apply. The common mistake is paying the full demand without realising a holdover was available, then waiting a year for the overpayment to unwind.

Provisional salaries-tax questions

Will I be taxed twice because the provisional tax overlaps?

No. The provisional tax is a prepayment, not a second tax. When next year's income is finally assessed, the provisional amount you paid is set off against the real liability, and any excess is refunded or carried forward. Over a steady career the mechanism only changes when you pay, not how much you pay in total.

Does leaving Hong Kong mid-year change the provisional tax?

It can substantially reduce it. If you cease employment or depart partway through the coming year, your assessable income for that year falls, which is a classic ground for a holdover of provisional tax. Notify the IRD of your departure and apply before the deadline. The tool's income-change field lets you model a partial year by entering the expected percentage drop in income.