The lower of the progressive and standard computations, after the Budget reduction.
Salaries tax payable
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Progressive computation
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Standard rate computation
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Total allowances
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Budget reduction
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Your breakdown
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Step
Amount (HKD)
Worked example
Take a single person earning HK$600,000 a year with HK$18,000 of deductions, mostly mandatory MPF contributions. Net total income is HK$600,000 less HK$18,000, which is HK$582,000. The progressive method then subtracts the HK$132,000 basic allowance to reach net chargeable income of HK$450,000. That HK$450,000 is taxed across the 50,000-wide bands at 2, 6, 10, 14 and 17 percent, giving HK$58,500. The standard-rate method ignores allowances and charges 15 percent on the full HK$582,000, which is HK$87,300. The Inland Revenue Department charges the lower figure, so HK$58,500 applies, then the one-off 2025/26 Budget reduction of 100 percent capped at HK$3,000 brings the final bill to HK$55,500.
How it is calculated
Salaries tax is the lower of two separate computations, so a high earner never pays more than the flat standard rate. The progressive method first removes your deductions and then your personal allowances to reach net chargeable income, which is taxed in HK$50,000 slices at 2, 6, 10 and 14 percent, with everything above HK$200,000 at 17 percent. The standard-rate method removes deductions but not allowances, then charges 15 percent on the first HK$5,000,000 of net total income and 16 percent above that. For most middle earners the progressive method wins because allowances cut the chargeable base, while very high earners fall onto the standard rate. Finally the 2025/26 Budget grants a one-off reduction of 100 percent of the tax, capped at HK$3,000 per case, which is applied after the lower figure is chosen.
Frequently asked questions
How is Hong Kong salaries tax calculated?
The Inland Revenue Department charges the lower of two figures. The first is progressive rates of 2, 6, 10, 14 and 17 percent on successive bands of your net chargeable income (income less deductions less personal allowances). The second is the standard rate of 15 percent (16 percent above HK$5 million) on your net total income, before allowances. For 2025/26 a one-off reduction of 100 percent of the tax, capped at HK$3,000, is then applied.
What is the basic allowance for salaries tax in 2025/26?
The basic personal allowance for a single taxpayer is HK$132,000 for 2025/26. A married person electing joint assessment or personal assessment with a spouse receives the married person allowance of HK$264,000 instead. These figures have remained unchanged from the prior year of assessment.
What deductions can reduce salaries tax in Hong Kong?
Common deductions include mandatory MPF contributions (up to HK$18,000), approved charitable donations, self-education expenses (up to HK$100,000), home loan interest (up to HK$100,000 over 20 years), and elderly residential care expenses. Deductions reduce net total income before the tax rate is applied, so they benefit both the progressive and standard-rate computations.
When must Hong Kong salaries tax be paid?
The Inland Revenue Department issues a tax demand note after you file your return, typically in November or December. Tax is normally payable in two instalments. The first and larger instalment covers about 75 percent of the bill, and the second covers the remaining 25 percent roughly three months later. Provisional tax for the coming year is usually collected at the same time as the first instalment.