If you earn a salary in Hong Kong, the tax you pay is called salaries tax. It's the closest thing the city has to a personal Hong Kong income tax. Rates start at 2% and stop at 17%, and most people pay far less than the top rate because of generous allowances.

Here's how it works, what's taxed, and what you'll pay in 2025/26 and 2026/27.

Does Hong Kong Have an Income Tax?

Not in the way most countries do. Instead of one tax on all income, the Inland Revenue Department (IRD) charges three separate taxes:

  • Salaries tax on income from a job, an office such as a directorship, or a pension
  • Profits tax on profits from a trade, profession, or business
  • Property tax on rental income from property in Hong Kong

Individuals also don't pay tax on dividends, capital gains, or most bank interest.

All three only apply to income that arises in or comes from Hong Kong. Companies are taxed the same way, as our guide to Hong Kong's territorial tax system explains.

So when people look up the Hong Kong income tax rate, they almost always mean the Hong Kong salary tax rate.

How Salaries Tax Works in Hong Kong

Three rules shape how the tax applies to you.

The Year of Assessment

The tax year, called the year of assessment, runs from April 1 to March 31. Income earned between April 2025 and March 2026 falls under 2025/26.

Who Has to Pay

You pay salaries tax on income from a Hong Kong employment, office, or pension. To decide whether a job is a Hong Kong employment, the IRD mainly looks at:

  1. Where the contract was negotiated, signed, and can be enforced
  2. Where the employer is based
  3. Where you are paid

If your job counts as a Hong Kong employment, your whole salary is normally taxable. Director's fees follow a different rule. They are taxed when the company is managed and controlled from Hong Kong, and the 60-day rule below doesn't apply to them.

The 60-Day Visitor Rule

You pay no salaries tax for a year in which all your services were performed outside Hong Kong. Work done here during visits totaling no more than 60 days is ignored for this test. Any part of a day counts as a full day, and meetings or training here count as work.

With a non-Hong Kong employment and more than 60 days here, the IRD normally taxes only the pay linked to your days in the city. Companies moving people here should plan for this early, along with the right Hong Kong employment visa for each hire.

No Tax Is Taken From Your Paycheck

Hong Kong employers don't deduct salaries tax from monthly pay. Your employer reports your income once a year, and you pay the tax yourself after the IRD issues an assessment. The bill usually includes provisional tax, an advance payment for the next year. Returns and deadlines are covered in our guide on [how to file and pay salaries tax in Hong Kong](FUTURE-LINK: blog #6, salaries tax filing and payment guide).

What Counts as Taxable Income in Hong Kong

Almost everything your employer pays you because of your job is taxable, whether it's paid before, during, or after the employment. The main types of taxable income Hong Kong employees must report are:

  • Salary, wages, and director's fees, reported before your MPF contributions are taken off
  • Bonuses, commissions, and leave pay
  • End-of-contract gratuities and payments in lieu of notice
  • Cash allowances, such as education or cost-of-living allowances
  • Tips you receive because of your job
  • Any tax your employer pays on your behalf
  • Gains from certain share options and share awards
  • The rental value of housing your employer provides

How Employer-Provided Housing Is Taxed

The IRD adds a "rental value" instead of taxing the full rent. This is normally 10% of your income from that employer after allowable expenses. Lower rates of 8% or 4% apply to some hotel or hostel rooms, and rent you pay back reduces the figure.

Income That Is Not Taxed

Severance and long service payments under the Employment Ordinance aren't taxed. Neither are your employer's own MPF contributions. Benefits in kind that can't be turned into cash are usually exempt too, with holiday travel and children's education benefits as the main exceptions.

Hong Kong Salaries Tax Rates for 2025/26 and 2026/27

Hong Kong calculates your tax in two ways. The IRD works out both and charges whichever is lower.

Progressive Rates

Progressive rates apply to your net chargeable income. That's your income after deductions and personal allowances. The bands are the same for 2025/26 and 2026/27.

Net chargeable income (HK$)

Rate

Tax on band (HK$)

Running total (HK$)

First 50,000

2%

1,000

1,000

Next 50,000

6%

3,000

4,000

Next 50,000

10%

5,000

9,000

Next 50,000

14%

7,000

16,000

Remainder

17%

Varies

Varies

Two-Tier Standard Rate

The standard rate applies to your net income after deductions but before personal allowances. You pay 15% on the first HK$5 million and 16% on anything above that.

Which Hong Kong Salary Tax Rate Applies to You?

Most employees pay less under the progressive rates. The standard rate only wins at high incomes. By our calculation, a single person with only the 2025/26 basic allowance reaches that point at about HK$2 million of net income.

In practice, the standard rate is a ceiling. The Hong Kong salaries tax rate you pay can never exceed 15% of net income on the first HK$5 million.

The One-Off Tax Cut for 2025/26

For 2025/26, final salaries tax is reduced by 100%, capped at HK$3,000 per taxpayer or per jointly assessed couple. The IRD applies the cut automatically. It doesn't reduce provisional tax, which must still be paid on time.

Allowances and Deductions That Lower Your Bill

These are why most people pay less than the rates suggest.

Personal Allowances

Allowances depend on your family situation, and all of those below rise from 2026/27.

Allowance

2025/26 (HK$)

2026/27 onward (HK$)

Basic allowance

132,000

145,000

Married person's allowance

264,000

290,000

Single parent allowance

132,000

145,000

Child allowance (each of the 1st to 9th child)

130,000

140,000

Additional child allowance for newborns (each child)

130,000

140,000

Dependent parent or grandparent, aged 60 or over

50,000

55,000

Dependent parent or grandparent, aged 55 to 59

25,000

27,500

A dependent parent or grandparent who lives with you all year earns an extra allowance of the same amount. From 2026/27, the newborn allowance applies for the first two years after birth instead of one.

Common Deductions

Deductions come off your income before allowances. The main 2025/26 limits are:

Deduction

Maximum per year (HK$)

Mandatory MPF contributions

18,000

Tax-deductible voluntary MPF contributions and qualifying deferred annuity premiums

60,000 combined

Voluntary Health Insurance Scheme (VHIS) premiums

8,000 per insured person

Self-education expenses

100,000

Home loan interest (up to 20 years)

100,000, or 120,000 if you live with your child and meet the conditions

Domestic rent

100,000, or 120,000 if you live with your child and meet the conditions

Elderly residential care expenses

100,000 (110,000 from 2026/27)

Approved charitable donations

35% of income after deductions

Work expenses only count if spent wholly, exclusively, and necessarily to earn your income. Everyday costs like commuting don't qualify.

Worked Example: From Salary to Tax Payable

Mei is single, earns HK$50,000 a month, and claims only the basic allowance and MPF deduction for 2025/26.

  1. Assessable income: HK$50,000 × 12 = HK$600,000
  2. Less mandatory MPF: HK$18,000, leaving net income of HK$582,000
  3. Less basic allowance: HK$132,000, leaving net chargeable income of HK$450,000
  4. Progressive tax: HK$16,000 on the first HK$200,000, plus 17% of the remaining HK$250,000 (HK$42,500), for a total of HK$58,500
  5. Standard rate check: 15% of HK$582,000 is HK$87,300. That's higher, so the progressive figure is used.
  6. Less the one-off cut: HK$58,500 minus HK$3,000 gives final tax of HK$55,500

That's about 9.25% of her gross pay. On the same salary in 2026/27, the higher basic allowance lowers her net chargeable income to HK$437,000. Her tax would be HK$56,290 before any new relief.

How the Hong Kong Income Tax Rate Compares With Profits Tax

Founders often ask whether to take a salary or leave profits in the company.

Tax

Who pays it

Rates

Salaries tax

Employees, directors, and pensioners

2% to 17% progressive, capped by the 15% and 16% standard rate

Profits tax for corporations

Limited companies

8.25% on the first HK$2 million of profits, 16.5% after that

Profits tax for unincorporated businesses

Sole proprietors and partnerships

7.5% on the first HK$2 million, 15% after that

A salary uses your personal allowances, while profits kept in the company may face a lower rate. Our Hong Kong tax advisory team can compare both options with you before you decide.

What Employers Need to Know

Employees pay their own tax, but employers handle the reporting. Each April, the IRD issues an Employer's Return (BIR56A). It must be filed within one month, with an IR56B form for each employee. Each IR56B lists the taxable income Hong Kong employers paid that person during the year. Other forms apply during the year:

  • IR56E for a new employee who is likely to be taxable, within three months of their start date
  • IR56F when an employee stops working for you but stays in Hong Kong, at least one month before their last day
  • IR56G when an employee is leaving Hong Kong for good or for a long period, one month before departure

After filing an IR56G, the employer must hold back all money owed to that person until they show a letter of release from the IRD.

These tasks sit alongside a company's other yearly duties, covered in our Hong Kong company annual compliance guide. If you don't have payroll staff yet, our accounting and bookkeeping team can prepare employer returns with your year-end records.

Key Points to Remember

  • Most cash payments from your job count as taxable income. Hong Kong also taxes employer housing through a rental value.
  • Progressive rates run from 2% to 17%, but the standard rate caps tax at 15% of net income on the first HK$5 million.
  • Allowances go up from 2026/27, and 2025/26 bills get a one-off cut of up to HK$3,000.

Tax figures change with each Budget, so check the latest IRD announcements. If you are setting up a Hong Kong company and need help with payroll, employer filings, or tax planning, LAINEXUS can guide you through each step.

Frequently Asked Questions

Q: Do foreigners pay income tax in Hong Kong?

Yes. Foreigners pay salaries tax on income from a Hong Kong employment, the same as local residents. Nationality doesn't decide liability. What matters is where the job is based and, for visiting staff, how many days they work in the city.

Q: How much can I earn before paying salaries tax?

There's no fixed threshold. For 2025/26, a single person pays nothing if income after deductions stays at or below the HK$132,000 basic allowance. That rises to HK$145,000 in 2026/27. Child and dependent allowances push the tax-free amount higher.

Q: Are bonuses taxed differently from salary?

No. Bonuses are added to your other employment income and taxed at the same rates. A bonus usually counts in the year you become entitled to it. A large bonus can push more of your income into the 17% band.

Q: Do I pay salaries tax in Hong Kong on work done overseas?

It depends on your employment. With a non-Hong Kong employment, usually only pay for work done here is taxed. With a Hong Kong employment, overseas workdays are generally taxable, but income already taxed abroad in a similar way may be exempt.

Q: Should married couples choose joint assessment?

Sometimes. Couples can be taxed separately or jointly. Joint assessment often helps when one spouse earns much less, because the couple can use the HK$264,000 married person's allowance for 2025/26. It's worth working out both options before filing your return.