Hong Kong Income Tax Rates 2026/27: Salaries Tax, Allowances and Company Tax
Hong Kong taxes qualifying employment income, business profits and property income under separate schedules. This guide explains the rates applicable in 2026/27, important allowances and deductions, and the original 2018/19 rates for historical reference.
1. Salaries tax: progressive rates from 2018/19 onwards
Under section 8 of the Inland Revenue Ordinance (Cap. 112), salaries tax generally applies to income arising in or derived from Hong Kong from an office, employment or pension. Net chargeable income is income after eligible deductions and allowances.
| Net chargeable income band | Marginal tax rate |
|---|---|
| First HK$50,000 | 2% |
| Next HK$50,000 | 6% |
| Next HK$50,000 | 10% |
| Next HK$50,000 | 14% |
| Remainder above HK$200,000 | 17% |
The progressive computation is compared with tax at the standard rate on net income before personal allowances; the lower amount generally applies. From 2024/25, the standard-rate computation is 15% on the first HK$5 million of net income and 16% on the remainder. The historical 2018/19 standard rate was 15% without that two-tier standard-rate structure.
Official guidance: IRD tax information for individuals and IRD allowances and tax rate table.
2. Personal allowances for 2026/27
Personal allowances reduce net chargeable income under the Salaries Tax and Personal Assessment rules. Eligibility requirements apply.
| Allowance | 2026/27 amount |
|---|---|
| Basic allowance | HK$145,000 |
| Married person's allowance | HK$290,000 |
| Single parent allowance | HK$145,000 |
| Child allowance, each eligible child (first to ninth) | HK$140,000 |
| Additional child allowance for an eligible newborn, subject to the applicable two-year rules | HK$140,000 per qualifying year |
| Dependent parent/grandparent aged 60 or above, or qualifying disability allowance recipient | HK$55,000 |
| Additional allowance if qualifying dependant resides with taxpayer continuously throughout the year | HK$55,000 |
| Dependent parent/grandparent aged 55-59 | HK$27,500 |
| Additional residential allowance for qualifying dependant aged 55-59 | HK$27,500 |
The 2026/27 Budget tax measures increased these amounts. The September 2026 Policy Address separately proposed HK$160,000 child allowances for eligible second and subsequent children born on or after 16 September 2026; this proposal requires legislation and should not be treated as enacted law.
3. Historical 2018/19 allowances
For comparison and older assessments, the basic allowance was HK$132,000, married person's allowance HK$264,000, single parent allowance HK$132,000, child allowance HK$120,000 per qualifying child, and additional newborn allowance HK$120,000. Dependent parent/grandparent allowances were generally HK$50,000 (aged 60 or over) or HK$25,000 (aged 55-59), with equivalent additional amounts where continuous co-residence requirements were met. Dependent brother/sister allowance was HK$37,500, and disabled dependant and personal disability allowances were HK$75,000 each, subject to eligibility.
4. Deductions against salaries income
Subject to the statutory conditions, available deductions include self-education expenses (up to HK$100,000), home loan interest (generally up to HK$100,000 under the ordinary ceiling), eligible elderly residential care expenses (up to HK$110,000 for 2026/27), mandatory contributions to recognised retirement schemes (generally up to HK$18,000), and approved charitable donations (subject to the 35% limit). Additional schemes exist for qualifying voluntary health insurance, tax-deductible MPF voluntary contributions, qualifying deferred annuity premiums and domestic rent. Some housing-related deductions have higher limits in specified circumstances.
See IRD deductions and eligibility guidance for conditions and applicable years.
5. Residents, non-residents and territorial taxation
Hong Kong does not generally tax an individual's worldwide income solely because that person is resident. Salaries tax focuses on the source and nature of employment income, with exemptions or apportionment potentially available under the Inland Revenue Ordinance and tax treaties. A non-resident may still owe Hong Kong tax on Hong Kong-sourced income. Profits tax similarly focuses on assessable Hong Kong-sourced profits rather than simply the residence of the owner.
6. Corporate and unincorporated business profits tax
Section 14 of the Inland Revenue Ordinance provides the core charge to profits tax for persons carrying on a trade, profession or business in Hong Kong on profits arising in or derived from Hong Kong, subject to exclusions and exemptions. The two-tier regime began in 2018/19.
| Assessable profits | Corporations | Unincorporated businesses |
|---|---|---|
| First HK$2 million | 8.25% | 7.5% |
| Above HK$2 million | 16.5% | 15% |
Where entities are connected, generally only one nominated entity may benefit from the two-tier rates for a year. Certain concessionary-rate activities are subject to special restrictions. Eligible revenue expenses incurred in producing chargeable profits are generally deductible under section 16, while section 17 restricts certain deductions. Qualifying intellectual-property expenditure and capital allowances are subject to their own statutory requirements; buying intellectual property is not automatically fully deductible.
Official guidance: IRD profits tax and two-tier profits tax FAQ.
7. Capital gains and property income
Hong Kong generally does not impose a separate capital gains tax on genuine capital gains. However, profits from trading assets, including properties acquired for resale, may be chargeable to profits tax. The distinction depends on evidence such as intention at acquisition, financing, holding period and conduct; it is not established merely by describing a disposal as capital.
Property tax generally applies to owners of Hong Kong land or buildings on assessable rental income at 15%, after the statutory allowance and relevant adjustments. Businesses may be eligible for relief against double taxation where property income is also included in profits tax. Stamp duty can arise on property or share transactions even where a capital gain is not taxed.
8. Returns, provisional tax and concessions
Hong Kong commonly assesses final tax and provisional tax in the same demand note, with provisional tax credited against the next final assessment. Deadlines are stated on the assessment or return and should not be assumed to be identical for every taxpayer.
The enacted 2026 tax concession provides a 100% reduction of final salaries tax, tax under personal assessment and profits tax for 2025/26, capped at HK$3,000 per case. This is a one-off measure, not a permanent rate change. See the IRD 2026/27 Budget implementation guidance.
9. Applicable legislation and official resources
- Inland Revenue Ordinance (Cap. 112) - salaries tax, profits tax, property tax, allowances and deductions.
- Inland Revenue Department: Individuals - rates, forms, deductions and allowances.
- Inland Revenue Department: Profits Tax - corporate and business taxation.
- 2026/27 tax measures - enacted concessions and allowances.
- 2026 Policy Address tax proposals - pending legislative changes.
This article is general information, not a substitute for a review of the applicable assessment year, tax return and current legislation.