Hong Kong Personal Tax Guide: Salaries Tax Rates, MPF, Allowances 2026
Hong Kong's Salaries Tax is a progressive tax on employment income at rates of 2%, 6%, 10%, 14%, and 17%. Most employees pay far less than 17% because of generous allowances. The standard rate cap (15% of gross income) ensures high earners never pay more than 15% of total income. MPF contributions — 5% each from employer and employee, capped at HKD 1,500/month each — are mandatory for most workers. Here is how Salaries Tax works in 2026.
Hong Kong imposes Salaries Tax on income arising in or derived from Hong Kong from any employment, office, or pension. The tax is charged under the Inland Revenue Ordinance (IRO). Hong Kong uses a territorial source principle — only income sourced in Hong Kong is taxable. If you render all services outside Hong Kong, the income is not subject to Salaries Tax. The tax year runs from 1 April to 31 March. Filing is due by early May each year for individual taxpayers. Employers must file annual returns for all employees. Compare Salaries Tax with Profits Tax →
Real-world example: A single employee earning HKD 480,000 per year. After the basic allowance of HKD 132,000, net chargeable income is HKD 348,000. The progressive tax calculation: first HKD 50,000 at 2% = HKD 1,000, next HKD 50,000 at 6% = HKD 3,000, next HKD 50,000 at 10% = HKD 5,000, next HKD 50,000 at 14% = HKD 7,000, remaining HKD 148,000 at 17% = HKD 25,160. Total progressive tax = HKD 41,160. The standard rate check: 15% of HKD 480,000 = HKD 72,000. Taxpayer pays the lower: HKD 41,160. Effective tax rate: 8.6%. For a married person with HKD 1,200,000 income and two children, after allowances for spouse (HKD 132,000), children (HKD 130,000 each), the tax can be substantially reduced. See how investment income is taxed differently →
Salaries Tax Rates 2026 (Progressive)
Hong Kong's progressive Salaries Tax rates apply to net chargeable income after allowances:
- First HKD 50,000: 2%
- Next HKD 50,000: 6%
- Next HKD 50,000: 10%
- Next HKD 50,000: 14%
- Remaining income: 17%
A standard rate cap limits the total tax to 15% of gross assessable income (before allowances). The taxpayer pays whichever is lower — progressive tax on net chargeable income or 15% of gross income. For most middle-income earners, the progressive calculation produces a lower tax bill. For high earners with few allowances, the 15% standard rate cap applies.
MPF Mandatory Provident Fund Contributions
The MPF system requires mandatory contributions of 5% of relevant income from both employer and employee, each capped at HKD 1,500 per month (HKD 18,000 per year). Employees earning below HKD 7,100 per month are exempt from employee contributions but employers still contribute. Income above HKD 30,000 per month is not subject to mandatory contributions. MPF contributions are deductible for Salaries Tax purposes. Employees can claim deductions for mandatory MPF contributions up to the annual cap. Voluntary contributions may also be deductible subject to limits. The total deductible MPF contribution for an employee is capped at the mandatory amount. Employers can deduct MPF contributions as a business expense under Profits Tax.
Personal Allowances and Deductions
Key allowances for the 2025/26 tax year: Basic allowance: HKD 132,000 per person. Married person's allowance: HKD 264,000 (if spouse has no income). Child allowance: HKD 130,000 per child (first to ninth child). Dependent parent/grandparent allowance: HKD 25,000 to HKD 50,000 depending on age and whether they live with you. Single-parent allowance: HKD 132,000. Disabled dependent allowance: HKD 75,000. Deductions include: MPF contributions (up to HKD 18,000), self-education expenses (up to HKD 100,000), charitable donations (up to 35% of assessable income), home loan interest (up to HKD 100,000 per year, max 20 years), and Qualifying Annuity Premiums and Tax Deductible MPF Voluntary Contributions (up to HKD 60,000 total).
Tax Credits
Hong Kong offers various tax credits to reduce Salaries Tax liability. The most significant is the Foreign Domestic Helper Levy (up to HKD 30,000 paid tax credit). There are also tax credits for approved research and development and for contributions to recognized retirement schemes. One-off concessionary measures are sometimes introduced in the annual Budget, such as a 100% tax waiver capped at HKD 10,000. Unlike some jurisdictions, Hong Kong does not offer general investment tax credits or green energy credits for individuals. Tax credits directly reduce tax payable, while allowances reduce assessable income.
What is the maximum Salaries Tax rate in Hong Kong?
The maximum Salaries Tax rate is effectively 15% because of the standard rate cap. While progressive rates go up to 17%, high earners pay the lower of progressive tax or 15% of gross income. This makes Hong Kong one of the lowest-tax jurisdictions in the developed world for high-income earners.
Are MPF contributions tax deductible?
Yes, mandatory MPF contributions by employees are deductible from assessable income for Salaries Tax purposes, up to the annual cap of HKD 18,000 (HKD 1,500 per month). Employers can deduct their MPF contributions as business expenses under Profits Tax.
Do I pay Salaries Tax if I work outside Hong Kong?
Hong Kong taxes only income sourced in Hong Kong. If all employment services are rendered outside Hong Kong, the income is not subject to Salaries Tax. If services are partly rendered in Hong Kong, only the portion attributable to Hong Kong services is taxable. This is the territorial principle in action.
What is the difference between progressive tax and standard rate?
Progressive tax applies graduated rates (2–17%) to net chargeable income (assessable income minus allowances and deductions). The standard rate (15%) applies to gross assessable income before allowances. The Inland Revenue Department calculates both and charges the lower amount. Most taxpayers benefit from the progressive calculation.