Hong Kong Salaries Tax Guide 2026/27: Calculation, Rates, Allowances & Calculator

By Jessica Liu, CPALast updated: August 202614 min read

Statutory source alignment verified for August 2026 by Jessica Liu, CPA (Statutory Research)

1. Overview of Hong Kong Salaries Tax (2026/27)

Hong Kong maintains one of the most attractive, competitive, and straightforward tax systems in the world. Governed by the Inland Revenue Department (IRD) under the Inland Revenue Ordinance (Cap. 112), Salaries Tax is levied on income arising in or derived from Hong Kong from any office, employment, or pension.

Key highlights of the Hong Kong tax system include:

Territorial Tax Basis: Only income sourced in Hong Kong is taxable. Foreign-sourced employment income is generally exempt.
No Capital Gains Tax: Profits from investments, stock options capital growth, or property sales are non-taxable.
No VAT or GST: Hong Kong imposes zero consumption tax or value-added tax.
Dual Tax System: Taxpayers are assessed under both Progressive Rates (2% to 17%) and a flat Standard Rate (15%), automatically paying whichever amount is lower.

2. Progressive Rates vs Standard Rate System

The IRD calculates your tax bill under two distinct methods and issues your official demand note for the lower amount.

Progressive Tax Rates (2026/27)

Progressive tax rates apply to your Net Chargeable Income (Gross Income minus Allowable Deductions minus Personal Allowances).

Net Chargeable Income Bracket	Tax Rate	Tax Payable on Bracket
First HK$50,000	2%	HK$1,000
Next HK$50,000 (HK$50,001 – HK$100,000)	6%	HK$3,000
Next HK$50,000 (HK$100,001 – HK$150,000)	10%	HK$5,000
Next HK$50,000 (HK$150,001 – HK$200,000)	14%	HK$7,000
Remainder (Above HK$200,000)	17%	17% on excess

Standard Rate (15% Flat Rate)

The standard rate applies a flat 15% (or two-tiered 15%/16% for net incomes above HK$5,000,000) directly to your Net Income (Gross Income minus Deductions, without claiming personal allowances). High earners naturally benefit from the standard rate cap when their personal allowances represent a small fraction of overall earnings.

3. Personal Allowances & Reliefs Table (2026/27)

Taxpayers can claim statutory personal allowances to significantly reduce assessable income before applying progressive rates.

Allowance Category	2026/27 Amount (HKD)	Eligibility & Notes
Basic Allowance	HK$132,000	Granted automatically to all single taxpayers.
Married Person's Allowance	HK$264,000	Claimable if spouse has no income or elects joint assessment.
Child Allowance (Per Child)	HK$120,000	For unmarried dependent children under 18 (or full-time students). Additional HK$120,000 in year of birth.
Single Parent Allowance	HK$132,000	For single parents who have sole or primary care of a child.
Dependent Parent / Grandparent	HK$50,000	Aged 60+ (or HK$25,000 for aged 55-59). Double if residing together.
Disabled Dependent Allowance	HK$75,000	Claimable per eligible disabled dependent.

4. MPF Contributions & Allowable Tax Deductions

In addition to personal allowances, taxpayers can deduct specific expenses directly from total income:

Mandatory Provident Fund (MPF): Mandatory employee contributions (5% of income) are tax-deductible up to a annual maximum of HK$18,000.
Tax-Deductible Voluntary Contributions (TVC): Additional voluntary MPF contributions qualify for extra tax relief up to HK$60,000 per year.
Self-Education Expenses: Expenses for courses attended at recognized training institutions up to HK$100,000.
Home Loan Interest: Deductible up to HK$100,000 per year for up to 20 years of assessment.
Approved Charitable Donations: Tax-deductible up to 35% of assessable income.
Voluntary Health Insurance Scheme (VHIS): Premiums paid for self or dependents up to HK$8,000 per insured person.

5. Hong Kong Salaries Tax Computation Formula

The exact IRD formula for calculating your tax liability is as follows:

Assessable Income = Gross Salary + Bonuses + Share Options + Housing Allowance
Net Income = Assessable Income − Outgoings & Expenses − MPF Contributions (Max HK$18k)
Net Chargeable Income = Net Income − Personal Allowances

Tax Payable = MIN( Progressive_Tax(Net Chargeable Income), 15% × Net Income )

6. Real-World Computation Case Studies

Case Study A: Single Professional earning HK$360,000/year (HK$30,000/month)

• Gross Income: HK$360,000
• MPF Employee Deduction (5% capped): -HK$18,000
• Net Income: HK$342,000
• Basic Allowance: -HK$132,000
• Net Chargeable Income: HK$210,000

Progressive Tax Breakdown:
• First HK$50k @ 2% = HK$1,000
• Next HK$50k @ 6% = HK$3,000
• Next HK$50k @ 10% = HK$5,000
• Next HK$50k @ 14% = HK$7,000
• Remaining HK$10k @ 17% = HK$1,700
Total Annual Tax: HK$17,700 (Effective Rate: 4.92%)

Case Study B: Married Senior Manager with 1 Child earning HK$900,000/year

• Gross Income: HK$900,000
• MPF Deduction: -HK$18,000
• Net Income: HK$882,000
• Married Allowance + Child Allowance: -(HK$264,000 + HK$120,000) = -HK$384,000
• Net Chargeable Income: HK$498,000

Progressive Tax: HK$66,660 | Standard Rate Tax (15% of HK$882k): HK$132,300
IRD Assesses Progressive Rate: HK$66,660 (Effective Rate: 7.41%)

7. Expat & Foreigner Tax Rules (The 60-Day Rule)

Foreign employees working in Hong Kong benefit from specialized IRD rules:

The 60-Day Exemption Rule: Non-resident employees visiting Hong Kong who render services in Hong Kong for 60 days or less in a tax year are fully exempt from Hong Kong Salaries Tax on non-HK employment.
Housing Allowance Optimization: If an employer provides rent-free accommodation or refunds rent paid by the employee, the taxable rental value is capped at 10% of assessable income, saving thousands in tax compared to a cash salary allowance.

Calculate your exact expat tax liability with our Hong Kong Tax Calculator for Expats.

8. eTAX Online Filing & Important Deadlines

The Hong Kong tax year runs from April 1 to March 31.

May 2: IRD issues Tax Returns for Individuals (Form BIR60).
June 1: Deadline for paper tax return submission (1 month from issue).
July 1: Deadline for electronic filing via IRD eTAX Portal (automatic 1-month extension).
January & April: Payment deadlines for final tax and 1st/2nd provisional tax installments.

9. Common Tax Filing Mistakes to Avoid

Forgetting to Claim MPF Deductions: Always deduct mandatory MPF employee contributions (up to HK$18,000).
Not Claiming Dependent Allowances: Ensure parents aged 55+ or full-time student children are properly declared.
Conflating Cash Allowance with Housing Reimbursement: Ensure rental reimbursement contracts meet IRD guidelines for 10% rental value treatment.
Missing Provisional Tax Installment Deadlines: Late payments trigger an automatic 5% penalty from the IRD.

10. Frequently Asked Questions

What is the salaries tax rate in Hong Kong for assessment year 2026/27?

Hong Kong salaries tax uses progressive rates ranging from 2% to 17% on net chargeable income, or a flat standard rate of 15% on net income before personal allowances, whichever produces a lower tax amount.

How is Hong Kong salaries tax calculated?

Salaries tax is calculated by taking total employment income, subtracting allowable deductions (like MPF mandatory contributions up to HK$18,000) and personal allowances (Basic Allowance of HK$132,000), then applying either the progressive tax brackets (2%, 6%, 10%, 14%, 17%) or the 15% standard rate.

What is the MPF contribution deduction limit for 2026/27?

Mandatory Provident Fund (MPF) contributions made by employees are deductible from assessable income up to a maximum cap of HK$18,000 per year.

What is the Basic Allowance for Hong Kong taxpayers?

All individual Hong Kong taxpayers receive a Basic Allowance of HK$132,000 per year. Married couples filing jointly receive a Married Person's Allowance of HK$264,000.

What is the 60-day rule for foreign employees in Hong Kong?

Under IRD rules, non-residents who perform services in Hong Kong for 60 days or less during a year of assessment are exempt from salaries tax on employment income sourced outside Hong Kong.

How does provisional salaries tax work in Hong Kong?

Provisional tax is an advance tax estimated based on the previous year's assessable income. It is paid in two annual installments (typically in April and July) alongside your final tax assessment.

Is foreign or overseas income taxable under Hong Kong salaries tax?

Hong Kong operates a strict territorial tax system. Only income sourced in or derived from employment performed in Hong Kong is taxable. Pure foreign-sourced income is generally exempt.

Which is better: Progressive Tax Rates or the Standard Rate?

The Inland Revenue Department (IRD) automatically calculates your tax using both progressive rates and the standard rate, issuing your demand note based on whichever yields the lower tax bill.

When is the Hong Kong salaries tax filing deadline?

Paper tax returns (Form BIR60) are typically due within 1 month of issue (usually June 1), while eTAX online filing receives an automatic 1-month extension (usually July 1).

How can I calculate my net take-home salary after HK salaries tax?

Subtract your annual MPF employee contribution (5% up to HK$18,000) and your estimated annual salaries tax from your gross salary. Use our free Hong Kong Net Salary Calculator to get a instant monthly breakdown.

Ready to Calculate Your Hong Kong Salaries Tax?

Get an instant, accurate breakdown of your progressive tax, standard rate tax, MPF deductions, and net monthly take-home salary.

Salaries Tax Calculator →Net Take-Home Salary Tool

Interesting Facts

Hong Kong salaries tax rates start as low as 2% under the progressive system, making it one of the most favorable income tax regimes in the world.
The basic allowance for 2026/27 is HK$132,000, meaning the first HK$132,000 of your net chargeable income is completely tax-free.
Taxpayers can choose between the progressive rate and the standard rate each year, and they should always pick the method that produces the lower tax bill.
Mandatory Provident Fund (MPF) contributions are deductible up to HK$18,000 per year for each of the employee and employer portions.
The IRD's territorial basis means that employment income sourced outside Hong Kong is generally not taxable, even if you are a Hong Kong resident.

Quick Quiz

1. What is the maximum salaries tax rate under the progressive system for 2026/27?

Option A: 15%
Option B: 17%
Option C: 20%
Option D: 25%

2. Which of the following is NOT deductible from salaries tax assessable income?

Option A: MPF contributions
Option B: Charitable donations
Option C: Private living expenses
Option D: Home loan interest

3. When are individual tax returns typically issued by the IRD?

Option A: January
Option B: March
Option C: May
Option D: July