Disclaimer: This article is for informational purposes only and does not constitute legal, financial, immigration, or medical advice. Requirements, fees, and policies are subject to change. Always verify current information with the relevant Hong Kong government authority or a qualified professional.
Hong Kong operates one of the most straightforward tax systems in the developed world. There is no VAT, no capital gains tax, no estate duty, and no tax on dividends or interest income. The system taxes only three types of income, each under its own ordinance: salaries tax on employment income, profits tax on business income, and property tax on rental income.
For most expats on a standard employment contract, salaries tax is the only one that matters. The rates are low by global standards, the allowances are generous, and the filing process is manageable once you understand how it works. This guide covers the key rules, rates, and filing steps for the 2025/26 year of assessment.
What Is Hong Kong Salaries Tax?
Hong Kong salaries tax is a tax on income arising from employment, office, or pension in Hong Kong. It is administered by the Inland Revenue Department (IRD, 稅務局) under the Inland Revenue Ordinance.
Unlike many countries, Hong Kong does not have a single unified income tax. Salaries tax applies specifically to employment income. If you also earn rental income or business profits, those are taxed separately under property tax and profits tax respectively. Residents can elect “personal assessment,” which combines all three income types into a single calculation, sometimes producing a lower overall liability.
The Hong Kong tax year runs from 1 April to 31 March. The current year of assessment is 2025/26 (1 April 2025 to 31 March 2026).
Who Needs to Pay Hong Kong Salaries Tax?
Salaries tax applies to anyone who earns income from a Hong Kong employment, a Hong Kong office, or a Hong Kong pension. The key word is “Hong Kong” in terms of where the employment is sourced, not where you live.
Hong Kong uses a territorial basis of taxation. This means you are taxed on Hong Kong-sourced income regardless of whether you are a resident, a permanent resident, or a foreign national. Conversely, income earned entirely outside Hong Kong is generally not taxable here, even if you are a Hong Kong resident.
An employment is treated as a “Hong Kong employment” unless all three of the following conditions are met: the contract was negotiated, concluded, and enforceable outside Hong Kong; the employer is resident outside Hong Kong; and no part of the remuneration is paid by a Hong Kong entity.
The 60-Day Rule
If you visit Hong Kong for work but your total days of service here do not exceed 60 days in any year of assessment, your Hong Kong-sourced employment income from those visits is exempt from salaries tax. This applies to both Hong Kong and non-Hong Kong employments. Note that partial days count as full days for this calculation.
Hong Kong Salaries Tax Rates
Hong Kong salaries tax is calculated under two methods, and you pay whichever produces the lower amount. The IRD calculates both automatically.
Progressive Rates
Progressive rates apply to your net chargeable income (assessable income minus deductions minus allowances):
| Net Chargeable Income (HKD) | Rate |
|---|---|
| First 50,000 | 2% |
| Next 50,000 (50,001 to 100,000) | 6% |
| Next 50,000 (100,001 to 150,000) | 10% |
| Next 50,000 (150,001 to 200,000) | 14% |
| Remainder (above 200,000) | 17% |
Standard Rate
The standard rate applies to your net income (assessable income minus deductions, but before personal allowances):
| Net Income (HKD) | Rate |
|---|---|
| First 5,000,000 | 15% |
| Remainder (above 5,000,000) | 16% |
The two-tiered standard rate was introduced from the 2024/25 year of assessment. Previously, the standard rate was a flat 15%. This change only affects high earners with net income exceeding HKD 5 million.
Most expats on typical salaries will pay under the progressive rates, as these produce a lower figure after allowances are applied.
Tax Reduction for 2025/26
For the 2025/26 year of assessment, the government provides a 100% tax reduction on salaries tax, capped at HKD 3,000 per taxpayer. This is applied automatically after the tax is calculated.
Personal Allowances
Personal allowances reduce your assessable income before the progressive tax rates are applied. The following allowances are available for 2025/26:
| Allowance | Amount (HKD) |
|---|---|
| Basic allowance | 132,000 |
| Married person’s allowance | 264,000 |
| Child allowance (per child) | 120,000 |
| Single parent allowance | 132,000 |
| Dependent parent/grandparent (aged 60+) | 50,000 |
| Additional dependent parent/grandparent (residing with you, aged 60+) | 50,000 |
| Dependent parent/grandparent (aged 55 to 59) | 25,000 |
| Dependent brother/sister | 37,500 |
| Disabled dependant allowance | 75,000 |
| Personal disability allowance | 75,000 |
You claim either the basic allowance or the married person’s allowance, not both. If both spouses are working, one can claim the married person’s allowance while the other claims nothing, or each can claim the basic allowance separately. The approach that produces the lower combined tax should be chosen.
The child allowance applies to each unmarried child under 18, or under 25 if in full-time education, or of any age if the child is incapacitated. In the year a child is born, an additional one-time allowance of HKD 120,000 is granted on top of the standard child allowance.
Deductions You Can Claim
In addition to personal allowances, several deductions reduce your assessable income. The main deductions relevant to expats include:
| Deduction | Annual Limit (HKD) |
|---|---|
| Mandatory MPF contributions | 18,000 |
| Self-education expenses | 100,000 |
| Home loan interest | 100,000 (or 120,000 with qualifying child) |
| Approved charitable donations | 35% of assessable income |
| Elderly residential care expenses | 100,000 per parent/grandparent |
| VHIS premiums | 8,000 per insured person |
| Qualifying annuity premiums + voluntary MPF | 60,000 (combined cap) |
| Domestic rental deduction | 100,000 (or 120,000 with qualifying child) |
MPF contributions are the most common deduction for employed expats. Your employer deducts 5% of your salary (up to a maximum relevant income of HKD 30,000 per month), and the mandatory employee portion is automatically deductible up to HKD 18,000 per year.
The domestic rental deduction is worth noting for expats who rent. If you pay rent for your Hong Kong residence and do not receive a housing allowance from your employer, you can deduct up to HKD 100,000 per year. This was introduced from the 2022/23 year of assessment.
The Voluntary Health Insurance Scheme (VHIS) allows a deduction of up to HKD 8,000 per insured person per year. If you purchase a qualifying VHIS policy for yourself, your spouse, or your children, each policy generates its own deduction.
How to File Your Hong Kong Tax Return
Filing your tax return in Hong Kong is relatively straightforward compared to most countries.
Timeline
The IRD issues individual tax returns (form BIR60) in early May each year. The standard filing deadline is one month from the date of issue for paper returns. If you file electronically via eTAX, you receive an automatic one-month extension, giving you roughly two months from the issue date.
For the 2024/25 year of assessment (filed in mid-2025), the typical paper deadline falls in early June and the eTAX deadline in early July.
Filing Methods
eTAX (recommended): Register for an eTAX account on the IRD website. Electronic filing is faster, offers the one-month extension, and provides instant confirmation. The system pre-fills some information based on your employer’s annual return.
Paper return: Complete the BIR60 form and post it to GPO Box 132, Hong Kong, or deliver it in person to the Revenue Tower in Wan Chai. Photocopies and fax copies are not accepted.
What to Report
Your employer files an annual return (IR56B) reporting your salary to the IRD. Your BIR60 should match this figure. You need to report:
- Total salary, wages, and employment income
- Housing benefits and housing allowance (if any)
- Share options and awards (if any)
- Other employment-related income (bonuses, commissions, director’s fees)
You also claim your allowances and deductions on the BIR60.
Assessment and Payment
After filing, the IRD issues a Notice of Assessment, usually within a few months. Tax is payable in two instalments: 75% with the first instalment (usually due in January) and 25% with the second instalment (usually due in April). The first year’s assessment may also include a provisional tax payment for the following year.
If you disagree with your assessment, you can object in writing within one month of the assessment date.
Key Rules Expats Should Know
No Worldwide Taxation
Unlike the United States, United Kingdom, and many other countries, Hong Kong does not tax worldwide income. If you have a bank account earning interest overseas, investment gains in a foreign market, or rental income from property in your home country, none of that is taxable in Hong Kong. Only income from Hong Kong employment, Hong Kong offices, and Hong Kong pensions falls within the scope of salaries tax.
Part-Year Residents
If you arrive in or leave Hong Kong partway through a tax year, your assessable income is based on the actual period of employment in that year. Allowances are granted in full for the year regardless of how many months you worked. This can result in a lower effective tax rate for your first and last years in Hong Kong.
Housing Benefits
If your employer provides accommodation or a housing allowance, this is treated as taxable income. Employer-provided accommodation is assessed at a deemed rental value (typically 8% of total income less outgoings for a single unit). A cash housing allowance is taxed in full.
Double Taxation
Hong Kong has signed comprehensive double taxation agreements (DTAs) with over 45 jurisdictions. If you are taxed on the same income in both Hong Kong and your home country, the DTA may provide relief. Check whether a DTA exists between Hong Kong and your country of residence on the IRD DTA page.
Leaving Hong Kong
If you plan to leave Hong Kong permanently, you must notify the IRD before departure. Your employer is required to file a notification (IR56G) at least one month before your departure date, and the IRD will issue an early assessment to clear your tax obligations. Do not leave without settling your final tax bill, as the IRD may issue a departure prevention direction to the Immigration Department.
Frequently Asked Questions
How much tax will I pay on a HKD 600,000 salary?
On an annual salary of HKD 600,000 for a single person with no dependants, the calculation would be: assessable income HKD 600,000, minus mandatory MPF contribution (approximately HKD 18,000), minus basic allowance (HKD 132,000), leaving net chargeable income of HKD 450,000. Under progressive rates, the tax would be approximately HKD 58,500 before the 2025/26 tax reduction of HKD 3,000, resulting in roughly HKD 55,500 payable. This represents an effective rate of about 9.3%.
Do I need to file a tax return if I earn below the basic allowance?
Yes. If the IRD issues you a tax return (BIR60), you are legally required to complete and submit it, even if your income falls below the taxable threshold. Failure to file carries penalties. However, you will not owe any tax if your income is below the allowance amount.
Is my overseas income taxable in Hong Kong?
No. Hong Kong operates on a territorial basis. Income earned from employment wholly performed outside Hong Kong, foreign investment income, overseas rental income, and capital gains from any source are all outside the scope of Hong Kong salaries tax.
What happens if I file late?
The IRD may issue an estimated assessment based on the information available, which could be higher than your actual liability. Persistent failure to file can result in prosecution, with penalties including fines up to HKD 10,000 for a first offence and higher amounts for repeat offences.
Can my spouse and I file jointly?
Hong Kong does not have joint filing in the traditional sense. However, married couples can elect for “personal assessment,” which combines both spouses’ income and applies a single set of allowances and deductions. This is usually beneficial when one spouse has significantly lower income or when there are property tax or business losses to offset.
