What is Salaries Tax (Hong Kong)?

**Overview**

Salaries Tax in Hong Kong is charged on income from employment, offices (such as company directors), and pensions arising in or from Hong Kong. The IRD assesses the tax that results in the LOWER liability between the progressive rates applied to net chargeable income and the standard rate (15%) applied to net total income.

**Progressive rate bands (2026/27)**

| Net Chargeable Income | Rate | |---|---| | First HKD 50,000 | 2% | | Next HKD 50,000 | 6% | | Next HKD 50,000 | 10% | | Next HKD 50,000 | 14% | | Remainder | 17% |

(Note: the HKD 5M threshold in the original question brief reflects earlier bands; the current rates extend to a 17% top marginal rate on the highest slice.)

**Key allowances (2026/27)**

- Basic allowance: HKD 132,000 - Married person's allowance: HKD 264,000 - Child allowance: HKD 120,000 per child (first 9 children) - Dependent parent/grandparent allowance: HKD 50,000 each (HKD 100,000 if residing with taxpayer) - Disabled dependent allowance: HKD 75,000 - Home loan interest deduction: maximum HKD 100,000 per year for up to 20 years - Elderly residential care expenses: HKD 100,000 - Self-education expenses: HKD 100,000 (must relate to current employment) - MPF voluntary contributions: up to HKD 18,000 per year (Tax Deductible Voluntary Contributions)

**How the standard rate cap works**

The IRD computes both assessments and charges whichever is lower. For most moderate-income individuals, the progressive calculation produces a lower tax bill. High earners where allowances do not significantly reduce chargeable income may benefit from the flat 15% cap. This is automatic: the taxpayer does not need to elect.

**What is taxable**

- Salaries, wages, leave pay, maternity/paternity pay - Director's fees - Commissions and bonuses - Share awards and stock options (typically taxable on vesting or exercise) - Housing benefits provided by employer (rental value typically 4%-10% of salary depending on accommodation type) - Employer contributions to unapproved pension schemes (approved MPF contributions are not taxable)

**What is exempt**

- Employer's mandatory MPF contributions (up to the cap) - Severance pay and long service pay under the Employment Ordinance - Pensions from approved occupational retirement schemes (within limits) - Salary for work performed entirely outside HK (offshore employment)

**Filing**

The IRD issues Individual Tax Returns (BIR60) each year in May. Employees whose income is below the basic allowance need not file unless specifically invited. Employers file IR56B (Employer's Return) by 1 May, reporting all remuneration paid in the year ended 31 March.