Last reviewed: 23 October 2026 | Currency: Hong Kong dollars (HK$), unless stated otherwise
Hong Kong operates a territorial tax system. Its principal direct taxes are salaries tax, profits tax and property tax. The rules are primarily contained in the Inland Revenue Ordinance (Cap. 112), administered by the Inland Revenue Department (IRD).
Hong Kong salaries tax rates
Under section 8 of the Inland Revenue Ordinance, salaries tax generally applies to income arising in or derived from Hong Kong from an office, employment or pension, subject to statutory exemptions and source rules. For 2025/26, net chargeable income is assessed at progressive rates:
| Net chargeable income band (HK$) | Marginal rate |
|---|---|
| First 50,000 | 2% |
| Next 50,000 | 6% |
| Next 50,000 | 10% |
| Next 50,000 | 14% |
| Remainder over 200,000 | 17% |
The tax payable is generally the lower of the progressive-rate calculation on net chargeable income and the standard-rate calculation on net income before personal allowances. The standard rate is 15% on the first HK$5 million of net income and 16% on the excess, subject to the statutory rules. This two-tier standard rate applies from 2024/25; the former flat 15% rate should not be presented as universally current. See the IRD salaries tax rates.
Personal allowances and deductions
Allowances reduce net assessable income when computing net chargeable income; they are not direct tax credits. Common 2025/26 basic allowances include:
| Allowance | 2025/26 amount (HK$) |
|---|---|
| Basic allowance | 132,000 |
| Married person's allowance | 264,000 |
| Single parent allowance | 132,000 |
| Child allowance, per qualifying child | 130,000 |
| Additional allowance in child's year of birth | 130,000 |
Dependent-parent or grandparent allowances, disabled dependant allowances, personal disability allowance and dependent sibling allowances may also be available if statutory conditions are met. Eligible deductions may include mandatory retirement contributions, approved charitable donations, self-education expenses, home loan interest, domestic rents, qualifying health insurance premiums and eligible annuity or tax-deductible MPF contributions. Limits, eligibility and claim periods differ; consult the IRD allowances and IRD deductions pages.
Tax treatment of residents and non-residents
Hong Kong generally taxes relevant Hong Kong-source income, not an individual's entire worldwide income simply because they reside in Hong Kong. Whether employment income is Hong Kong-sourced is a factual and legal question. Services rendered outside Hong Kong and certain short visits may qualify for relief under applicable provisions. Double-taxation arrangements may also affect liability. Consult sections 8 and 8A of Cap. 112 and IRD double taxation agreements.
Corporate profits tax and unincorporated businesses
Section 14 of Cap. 112 generally charges profits tax on persons carrying on a trade, profession or business in Hong Kong in respect of assessable profits arising in or derived from Hong Kong (other than profits from the sale of capital assets), subject to the law's detailed conditions.
| Taxpayer | First HK$2 million of assessable profits | Excess profits |
|---|---|---|
| Corporations | 8.25% | 16.5% |
| Unincorporated businesses | 7.5% | 15% |
The two-tiered regime is subject to restrictions, including the rule that only one entity within a group of connected entities can generally elect the reduced rate. Other exclusions may apply. Section 16 concerns deductions for expenditure incurred in producing chargeable profits; section 17 disallows specified expenses, including capital expenditure unless a specific statutory allowance applies. Intellectual-property deductions require satisfaction of the applicable provisions rather than an automatic full deduction for every purchase. See IRD profits tax.
Capital gains, property tax and investment income
Capital gains
Hong Kong does not impose a general standalone capital gains tax. Genuine capital gains are generally outside profits tax, while gains from trading or revenue transactions can be taxable. Classification depends on evidence and the applicable law. Hong Kong's foreign-sourced income exemption regime may also bring specified foreign-sourced disposal gains received in Hong Kong by multinational enterprise entities within profits tax unless an exception applies. See the IRD foreign-sourced income exemption guidance.
Property tax
Property tax is generally imposed at 15% on the net assessable value of Hong Kong land and buildings owned by persons within the statutory charge, with a standard allowance for repairs and outgoings and relevant adjustments. See IRD property tax. Stamp duty on property or shares is a separate matter and should not be confused with capital gains tax.
Historical reference: year of assessment 2017/18
The following historical salaries tax progressive bands apply to 2017/18 and must not be used for current returns:
| 2017/18 net chargeable income band | Marginal rate |
|---|---|
| First HK$45,000 | 2% |
| Next HK$45,000 | 7% |
| Next HK$45,000 | 12% |
| Remainder above HK$135,000 | 17% |
The standard rate was 15% for 2017/18. The original historical comparison also addressed how allowances for married persons, children, dependent parents or grandparents, disabled dependants and single parents could affect the income level at which the standard rate became preferable. Those illustrative thresholds depend on personal circumstances and deductions and should not be treated as universal statutory thresholds. For 2017/18, the basic allowance was HK$132,000 and married person's allowance HK$264,000.
For 2017/18, the headline profits tax rates were 16.5% for corporations and 15% for unincorporated businesses. The two-tiered profits tax rates described above were introduced for years of assessment commencing on or after 1 April 2018.
Legislation and official Hong Kong tax resources
- Inland Revenue Ordinance (Cap. 112), official electronic legislation
- IRD salaries tax rates
- IRD personal allowances
- IRD personal deductions
- IRD profits tax guidance
- IRD foreign-sourced income exemption regime
This article provides general information, not a determination of any person's tax liability. Verify the latest enacted rates, concessions, filing deadlines and official guidance for the relevant year of assessment.