HK Salaries Tax Reduction (Budget Rebate) Calculator

A rebate, not a rate cut

Each February the Financial Secretary delivers the Budget, and in most years it includes a one-off salaries tax concession. This is not a permanent change to how tax is worked out. Your tax is computed in full first, on the normal progressive scale or the standard rate, and only then is the rebate knocked off the bottom line. For the 2025/26 year of assessment the concession this calculator applies is a reduction of 100 percent of the tax, capped at $3,000 per case. Treat the percentage and the cap as Budget figures that change from year to year, so confirm the current concession with the Inland Revenue Department before relying on it.

Where the rebate sits in the calculation

Hong Kong charges salaries tax as the lower of two figures. The first is the progressive computation, which applies bands of 2, 6, 10, 14 and 17 percent to successive slices of your net chargeable income after the basic allowance of $132,000 and any dependant allowances. The second is the standard rate on your net total income before allowances. The rebate is applied after that comparison, to whichever figure is smaller. It is genuinely a credit against tax owed, not a deduction from income, so a dollar of rebate saves you a full dollar.

A $40,000 bill, rebated

Say your salaries tax for the year works out to $40,000 before any concession, and you are assessed on your own. Using the rates this calculator applies, the reduction is the smaller of 100 percent of $40,000 and the $3,000 cap. The cap bites, so you save $3,000 and pay $37,000.

The chart below makes the proportion honest. On a $40,000 bill the rebate is a thin sliver. It is the lower earners who feel it most, because for them the $3,000 can wipe the bill out entirely.

Who shares a cap, and who does not

The cap is set per case rather than per person. A single taxpayer gets their own $3,000 ceiling. A married couple who elect joint assessment are treated as one case, so they share a single $3,000 cap between them rather than claiming $3,000 each. That is the trap couples miss. If both spouses earn enough to generate tax separately, electing personal assessment or separate assessment can sometimes preserve two caps, though the wider sums usually decide which election is better. Run the comparison rather than assuming joint assessment always wins.

A common misreading

Plenty of people assume a 100 percent reduction means they pay nothing. It does not. The 100 percent describes the share of tax that is eligible for relief, but the $3,000 cap is the real limit for anyone with a meaningful bill. Note too that the rebate applies to salaries tax and to tax under personal assessment, not to profits tax or property tax on their own. Hong Kong has no separate tax on dividends, savings interest or capital gains, so those never enter the figure being rebated in the first place.

Does the rebate show up in my monthly pay?

No. Hong Kong does not run pay-as-you-earn withholding. You pay salaries tax in instalments after filing, so the concession reduces the demand note the IRD issues, not your monthly salary. If you already paid a provisional bill, the reduction is set against it.

Will there be a rebate again next year?

There is no guarantee. The concession is announced fresh in each Budget and the amount has swung widely in recent years, from generous five-figure caps to nothing at all. Plan your cash flow on the assumption that any future rebate is a bonus, and check the IRD Budget page once the February speech is out.

What if my tax is below the cap?

Then the 100 percent reduction clears the whole bill and you pay zero. If your computed tax is $2,400, for example, the rebate is $2,400, not $3,000, because you cannot be refunded more tax than you owed.