What is the salaries tax rate in Hong Kong?

## Hong Kong Salaries Tax Rates

Hong Kong Salaries Tax is levied on income from employment, offices, and pensions arising in or derived from Hong Kong. The IRD uses whichever produces the lower liability between:

• **Progressive rates** on net chargeable income (income less allowances and deductions)
• **Standard rate** of 15% on net total income (income less allowances only, at a flat 15%)

## 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% |

## Key Allowances and Deductions

| Allowance / Deduction | Amount | |---|---| | Basic allowance (single) | HKD 132,000 | | Married person's allowance | HKD 264,000 | | Child allowance (per child, first 9) | HKD 120,000 | | Dependent parent/grandparent aged 60+ | HKD 50,000 (HKD 100,000 if living with taxpayer) | | Home loan interest deduction | Up to HKD 100,000 per year | | Self-education expenses | Up to HKD 100,000 per year | | MPF mandatory contributions | Actual amount | | MPF Tax Deductible Voluntary Contributions | Up to HKD 18,000 | | Elderly residential care expenses | Up to HKD 100,000 |

## How the Standard Rate Cap Works

The IRD automatically computes both the progressive and standard rate assessments and charges the lower amount.

Example:

An individual earns HKD 800,000 in salary with no special allowances beyond the basic HKD 132,000:

Progressive calculation: - Net chargeable income: HKD 800,000 - HKD 132,000 = HKD 668,000 - Tax: (HKD 50K x 2%) + (HKD 50K x 6%) + (HKD 50K x 10%) + (HKD 50K x 14%) + (HKD 468K x 17%) = HKD 1,000 + HKD 3,000 + HKD 5,000 + HKD 7,000 + HKD 79,560 = HKD 95,560

Standard rate calculation: - Net total income: HKD 800,000 - HKD 132,000 = HKD 668,000 - Standard rate tax: HKD 668,000 x 15% = HKD 100,200

Progressive tax (HKD 95,560) is lower, so HKD 95,560 is charged.

## What Is Taxable

• Salaries, wages, director's fees, commissions, bonuses
• Share awards and options on vesting or exercise
• Housing benefit provided by employer (rental value = typically 4%-10% of other employment income)
• Benefits in kind with a market value

## What Is Exempt

• Employer mandatory MPF contributions
• Severance pay and long service pay under the Employment Ordinance (within statutory limits)
• Contributions to approved occupational retirement schemes
• Salary for work performed entirely outside HK where employment is not HK-based

## No Social Security or NI Equivalent

Hong Kong has no National Insurance, social security tax, or payroll tax beyond MPF contributions. The MPF employer contribution (5%, max HKD 1,500/month) is the total employer payroll tax burden. This is substantially lower than most jurisdictions:

| Jurisdiction | Employer payroll tax | |---|---| | Hong Kong (MPF) | Max HKD 18,000/year (~1.3% of HKD 1.4M salary) | | UK (National Insurance) | 13.8% above GBP 9,100/year | | Australia (Super) | 11.5% of ordinary time earnings | | US (FICA) | 6.2% Social Security + 1.45% Medicare |

## Filing

Employers file IR56B (Employer's Return) by 1 May covering all remuneration in the year to 31 March. Individuals who receive a BIR60 from the IRD must file their individual return, typically by 2 June (or 2 November via eTAX).