According to a government press release1, the Inland Revenue Department began issuing 2.77 million individual tax returns (BIR60) on May 4, 2026. With over 20 years of experience in completing BIR60 forms, General Accounting shares Salaries Tax calculation methods and explains personal allowances and deductions. Learn how to maximize tax concessions when filing your personal tax return for the best tax savings!
How much salary is required to pay tax?
There is no fixed figure, as the tax amount is not based solely on income, but rather on the net chargeable income.
Simply put, without any other allowances or deductions, a single person with an annual salary of $132,000 or a married couple with a combined annual salary of over $264,0005 may be liable for tax. However, by filing the tax return “correctly” and utilizing personal allowances, deductions, and joint assessment for couples, you can reduce your tax bill or even pay no tax at all. Therefore, understanding Salaries Tax calculation, Personal Assessment, and net chargeable income is essential tax knowledge.
More tax articles: Guide to Individual Salaries Tax | Provisional Tax
How to calculate Salaries Tax?
The simplest Salaries Tax formula:
Total Income – Deductions – Allowances = Net Chargeable Income6
The tax payable is then calculated by applying either progressive tax rates or the standard tax rate to the net chargeable income.
Why do many clients still have questions about Salaries Tax calculation every year?
The Inland Revenue Department has designed a Tax Calculator for taxpayers to calculate their Salaries Tax. Simply enter your annual salary, deductions, and allowances, and the calculator will determine the tax amount.
However, the public still has many questions regarding Salaries Tax calculation because the methods shown on the Inland Revenue Department’s website do not provide detailed explanations of deductible items and allowances.
Therefore, being a smart taxpayer means knowing how to utilize deductions and allowances when filing your tax return.
Progressive Tax Rates 2026
Net chargeable income is calculated using the following method:
| Net Chargeable Income | Tax Rate |
|---|---|
| First $50,000 | 2% |
| Second $50,000 | 6% |
| Third $50,000 | 10% |
| Fourth $50,000 | 14% |
| Remainder | 17% |
Standard Tax Rate 2026
Two-Tiered Standard Rates Regime
Starting from the 2024/25 year of assessment, a two-tiered standard rates regime has been implemented2. The rate is 15% for net income up to $5 million, and 16% for the portion exceeding $5 million. Consequently, the higher the income, the higher the tax payable.
Personal Tax Deductions 2026
Deduction ceilings for various tax expenses3
| Expense Item | 2025 to 2026 | 2026 to 2027 |
|---|---|---|
| Self-education expenses | $100,000 | $100,000 |
| Approved charitable donations [(Income - Deductions - Depreciation) x %] | 35% | 35% |
| MPF contributions | $18,000 | $18,000 |
| Qualifying annuity premiums and TVC | $60,000 | $60,000 |
| Domestic rent deduction | $100,000 (additional $20,000 if eligible) | $100,000 (additional $20,000 if eligible) |
| Home loan interest | $100,000 (additional $20,000 if eligible) | $100,000 (additional $20,000 if eligible) |
| Qualifying VHIS premiums | $8,000 | $8,000 |
| Elderly residential care expenses | $100,000 | $110,000 |
| Disabled dependant allowance (per person) | $75,000 | $75,000 |
Tax Deductions for Annuity Premiums and MPF Voluntary Contributions
Approved Charitable Donations
Note! The donation amount must be $100 or more to apply for tax deduction. The beneficiary must be a charitable institution or trust exempt from tax under Section 88 of the Inland Revenue Ordinance4.
Domestic Rent Deduction
Report rental expenses in Part 8.5 of the individual tax return. A maximum deduction of $100,000 per year is available (with an additional $20,000 if eligible).
Personal Tax Allowances 2026
Basic Allowance
Every Hong Kong taxpayer is entitled to a basic allowance of $132,0005 for the year of assessment.
Married Person’s Allowance
If one spouse is unable to use or fully utilize their personal allowance, they may opt for joint assessment under Salaries Tax or choose Personal Assessment to combine their allowances (known as “Married Person’s Allowance”). The Married Person’s Allowance for the year of assessment is $264,0005.
Child Allowance
A child allowance of $130,000 per child (for the 1st to 9th child) is available for each taxpayer with a cohabiting child under 18;
or a student aged 18 to 25 receiving full-time education;
or a child over 18 who is unable to work due to physical or mental disability;
Additionally, an extra child allowance of $130,000 is granted if the child was born during the year of assessment.
Dependent Brother or Sister Allowance
Dependent Parent and Dependent Grandparent Allowance
For each elderly dependent:
An allowance of $25,000 for each dependent aged 55 to 60;
An allowance of $50,000 for each dependent aged 60 or above;
An additional $25,000 or $50,000 is granted if the dependent resides with the taxpayer.
Single Parent Allowance
Disabled Dependant Allowance
Extended Reading: Guide to Amending Assessments | Objection Period for Assessments
Personal Assessment
How to apply for Personal Assessment?
To apply for Personal Assessment, simply complete Part 7 of the Individual Tax Return (BIR60) for the relevant year of assessment. For married persons choosing to be assessed jointly under Personal Assessment, both spouses must sign the IR76C form or the application section on their respective tax returns to complete the application process.
How does Personal Assessment save tax?
Frequently Asked Questions
There is no single "threshold" figure, as the tax payable depends on the "net chargeable income" after deducting allowances. However, without any other deductions, the reference values are as follows:
* Single Persons: Tax may be payable on an annual salary above approximately HK$132,000 (equivalent to the basic allowance).
* Married Couples (Joint Assessment): Tax may be payable on a combined annual salary above approximately HK$264,000.
* Note: By utilizing MPF contributions, rent deductions, child allowances, etc., the actual income threshold for paying tax can be significantly higher, or you may even be exempt from tax.
The Inland Revenue Department automatically compares "progressive rates" with the "standard rate" and issues the assessment notice based on the lower amount.
* Progressive Rates (calculated in tiers based on net chargeable income):
* First $50,000: 2%
* Next $50,000: 6%
* Third $50,000: 10%
* Fourth $50,000: 14%
* Remainder: 17%
* Standard Rate (Two-tiered regime from 2024/25 onwards):
* Net income up to $5 million: 15%
* Portion of net income exceeding $5 million: 16%
In addition to the basic allowance, taxpayers should note the following frequently overlooked deductions (for 2025-2026):
* MPF Contributions: Maximum deduction of $18,000.
* Qualifying Annuity and TVC: Combined maximum deduction of $60,000.
* Domestic Rent Deduction: Maximum annual deduction of $100,000 (additional $20,000 relief if eligible).
* Self-education Expenses: Maximum annual deduction of $100,000.
* Qualifying VHIS Premiums: Maximum deduction of $8,000 per insured person.
* Approved Charitable Donations: Donations must be $100 or more, with a maximum deduction of 35% of income.
Allowances are key to saving tax as they are deducted directly from your income:
* Basic Allowance: $132,000 per taxpayer.
* Married Person's Allowance: $264,000 for couples under joint assessment.
* Child Allowance: $130,000 for each child under 18 (or full-time student); an additional $130,000 if the child is born in that year.
* Dependent Parent/Grandparent Allowance: $25,000 for dependents aged 55-60; $50,000 for those aged 60 or above (doubled if living together).
* Single Parent Allowance: $132,000 (applicable to those who are divorced, widowed, or separated and caring for children).
Personal Assessment is a method that allows taxpayers to aggregate various sources of income (such as Salaries Tax, Profits Tax, and Property Tax).
* How it saves tax: If you have high non-salary income (e.g., rent or business profits), aggregating them allows you to deduct personal allowances and other items, often significantly lowering your tax bill.
* How to apply: Simply sign the election in Part 7 when completing your Individual Tax Return (BIR60). If a couple chooses joint Personal Assessment, both must sign.
Based on the tax returns issued by the Inland Revenue Department on May 4, 2026:
* Paper Submission: The deadline is one month after the issue date, which is June 4, 2026.
* Online Submission (eTAX): An automatic one-month extension is granted, making the deadline July 4, 2026.
* Recommendation: Using "eTAX" is not only convenient but also helps avoid late filing penalties.
Summary:
The above provides the latest information on 2026 salary income tax calculation, personal tax deductions, and allowances. Learning how to complete your personal tax return can save you a significant amount of tax. Additionally, taxpayers can use eTAX for online filing to receive an extra one-month extension. We hope you can flexibly utilize personal allowances, deductions, and Personal Assessment to achieve the best tax-saving solution.
Sources
1. Inland Revenue Department Tax Information
https://www.ird.gov.hk/eng/tax/ind_rem.htm
2. GovHK – Salaries Tax Personal Assessment Tax Rates
https://www.gov.hk/en/residents/taxes/taxfiling/taxrates/salariesrates.htm
3. IRD Table of Allowances, Deductions and Tax Rates
https://www.ird.gov.hk/eng/pdf/pam61e.pdf
4. Charitable Donations and Tax-Exempt Charities
https://www.ird.gov.hk/eng/tax/ach.htm
5. GovHK Allowance Amounts
https://www.gov.hk/en/residents/taxes/salaries/allowances/allowances/7years.htm
6. Calculate Salaries Tax and Personal Assessment
https://www.gov.hk/en/residents/taxes/etax/services/tax_computation.htm
7. Tax Deductions for Qualifying Annuity Premiums and Tax Deductible MPF Voluntary Contributions
https://www.gov.hk/en/residents/taxes/salaries/allowances/deductions/annuity.htm
