Salaries Tax Allowances and Deductions in Hong Kong: 2025/26 and 2026/27 Amounts.

How tax allowances and deductions work in Hong Kong

A tax allowance in Hong Kong is a fixed amount the Inland Revenue Department (IRD) takes off your income because of your personal circumstances: being a taxpayer at all, being married, or supporting children, parents or siblings. A deduction reflects money you actually spent on something the law rewards, such as mortgage interest, rent, MPF contributions or approved donations. Both reduce salaries tax, and both work the same way under personal assessment.

The order of the calculation matters. The IRD starts with your assessable income, subtracts deductions to reach your net income, then subtracts allowances to reach your net chargeable income. Net chargeable income is taxed at progressive rates from 2% to 17%. The IRD also works out tax at the standard rate on your net income (15% on the first HK$5 million and 16% on the rest, from 2024/25), and you pay whichever figure is lower.

That second calculation has a practical consequence. Standard rate tax is charged on income after deductions but before allowances, so a high earner who ends up paying the standard rate gets nothing from allowances. Deductions still reduce the bill. GovHK puts the point where a single person claiming only the basic allowance approaches the standard rate zone at HK$2,132,500 of annual income for 2026/27, before any deductions.

Amounts are set for each year of assessment, which runs from 1 April to 31 March. This guide gives the official figures for 2025/26, the year that ended on 31 March 2026, and for 2026/27, the current year, because the 2026-27 Budget raised several allowances from 2026/27 onwards.

Personal assessment. This is an election that adds an individual's income together, including salaries and business profits, into one computation. You can elect personal assessment if you are 18 or over (or younger with both parents deceased) and either ordinarily resident in Hong Kong or a temporary resident, which means more than 180 days here in the year, or more than 300 days across two consecutive years that include it. Every allowance and deduction in this guide applies under personal assessment too. One deduction is only available through it: interest on money borrowed to produce rental income, capped at the net assessable value of each let property.

Tax allowances in Hong Kong for 2025/26 and 2026/27

The 2026-27 Budget raised most personal allowances from 2026/27, and the legislation was passed by the Legislative Council on 13 May 2026 and gazetted on 22 May 2026. The figures below come from GovHK's table of allowance amounts.

The newborn rule also changed. From 2026/27, the additional child allowance can be claimed in each of the first two years after a birth, for every child born on or after 1 April 2025. The IRD's own example: for a child born during 2025/26, a parent claims HK$130,000 plus HK$130,000 for 2025/26, then HK$140,000 plus HK$140,000 for 2026/27, then HK$140,000 a year after that.

One more change is pending. The 2026 Policy Address proposed raising the child allowance and the newborn additional allowance to HK$160,000 for a second or later child born on or after 16 September 2026, with effect from 2026/27. It needs legislation and the details may change, so the table shows only the enacted amounts.

Who can claim each allowance

Each allowance has conditions, and they decide whether a claim succeeds. GovHK sets out the conditions for each allowance in full; the points that matter most are below.

Basic allowance. Everyone assessed to salaries tax or personal assessment receives it without making a claim, unless you are married and are granted the married person's allowance for that year instead.

Married person's allowance. You can claim it if you were married at any time in the year, live with your spouse or support them, and your spouse had no income chargeable to salaries tax and did not elect personal assessment separately. If both of you earn, the allowance only comes through joint assessment under salaries tax or a joint election for personal assessment. For tax purposes, a marriage counts if Hong Kong law recognises it or it is legally recognised where it took place.

Child allowance. It covers an unmarried child you maintain who is under 18, or aged 18 to 24 and in full-time education, or 18 or over and unable to work because of a physical or mental disability. Your own, adopted and step-children count, and so do those of your spouse or former spouse. Spouses who live together choose one of them to claim all the child allowances. GovHK's guidance is that the claim usually goes furthest with the spouse who has the higher income, unless that spouse pays at the standard rate.

Dependent parent and grandparent allowance. Three conditions apply. At some time during the year, the parent or grandparent, whether yours or your spouse's, must be:

• ordinarily resident in Hong Kong;
• aged 55 or over, or eligible for an allowance under the Government's Disability Allowance Scheme; and
• either living with you or your spouse, without paying full cost, for a continuous period of at least six months, or receiving at least HK$12,000 in money from you or your spouse towards their maintenance.

"Ordinarily resident" means habitually and normally resident in Hong Kong. The IRD looks at how many days the parent spent here and how long each stay lasted, whether they have a permanent home here, whether they own a home elsewhere, whether they work here, and where their relatives mainly live. Sending money satisfies only the maintenance condition; the residence condition is a separate test about where the parent habitually lives.

The additional allowance, which doubles the amount, applies only if the parent lived with you continuously for the whole year without paying full cost. Only one person can claim for the same parent, so brothers and sisters have to agree who claims. And you cannot have both this allowance and the elderly residential care deduction for the same parent in the same year.

Dependent brother or sister. You or your spouse must have had sole or predominant care of an unmarried brother or sister who meets the same age, education or disability tests as for a child. Half-blood, adopted and step-siblings count. If two people could claim, they must agree between them, or no allowance is granted.

Single parent allowance. You must be unmarried for the whole year, have ongoing responsibility for the care and supervision of a child, and be granted the child allowance for that child. No allowance is available for the year in which you marry, divorce, separate or lose a spouse; the first chance to claim is the following year. One allowance is granted however many children you care for.

Disabled dependant allowance. It applies when you or your spouse maintain a spouse, child, parent, grandparent, brother or sister who is eligible under the Disability Allowance Scheme. It is granted on top of the other allowance you claim for that person.

Personal disability allowance. You can claim it, from 2020/21 onwards, if you yourself are eligible for an allowance under the Disability Allowance Scheme.

Tax deductions in Hong Kong: caps for 2025/26 and 2026/27

GovHK lists every deduction available under salaries tax and personal assessment. The table gives each cap and the part of the Tax Return - Individuals (BIR60) where it is claimed.

The 2026-27 Budget raised only one deduction cap, for elderly residential care.

Home loan interest and domestic rent deductions

Home loan interest. The home loan interest deduction needs all of the following: you are a registered owner of the dwelling in the Land Registry records (sole owner, joint tenant or tenant in common); the dwelling is in Hong Kong and you use it as your home; the loan was taken to buy it and is secured by a mortgage or charge over it or another Hong Kong property; and the lender is a prescribed one, such as a financial institution, a licensed money lender, the Hong Kong Housing Society or your employer. Interest on a car parking space in the same development can be included.

The conditions that catch people out:

• Ownership follows the Land Registry record. In an IRD example, children paying the instalments on a flat registered to their parents cannot claim. Co-owners claim only their share of the interest, against a cap reduced by the same share. How title is held is usually decided at purchase, and a property lawyer in Hong Kong can explain joint tenancy and tenancy in common before completion.
• Interest paid before you move in, such as during construction, is not deductible.
• If you own more than one home, only your principal residence counts.
• The basic deduction is limited to 20 years of assessment, which need not be consecutive. A year counts in full even if you claimed only a few months' interest: the same IRD example has a buyer who claims five months of interest using up one of the 20 years.

Domestic rent. The domestic rent deduction has applied since 2022/23. You need a written tenancy, stamped under the Stamp Duty Ordinance, for a home in Hong Kong that is your principal place of residence. The IRD's rent FAQ confirms that a verbal tenancy does not qualify, and nor does a licence to occupy a serviced apartment, although a serviced apartment let under a proper tenancy does. There is no limit on the number of years you can claim the basic deduction.

No rent deduction is allowed for any period in which:

• you or your spouse legally and beneficially own any domestic premises in Hong Kong;
• your employer provides your home, or pays or refunds any part of the rent;
• the landlord is an associate, such as your spouse, parent, child, sibling, partner or a company you control;
• you or your spouse are a tenant or authorised occupant of a public rental housing flat; or
• the tenancy gives you an option to buy the flat.

Because the ownership bar runs period by period, home loan interest and rent cannot both be claimed for the same stretch of time. Co-tenants share the cap equally, a married couple living together share a single cap, and a tenancy covering only part of a year gets a proportionally smaller cap.

The additional HK$20,000. From 2024/25, each cap can rise to HK$120,000 through an additional deduction for taxpayers living with a young child. All four conditions must be met:

1. You lived with your child in Hong Kong for a continuous period of at least six months in the year, or a shorter period the Commissioner accepts as reasonable.
2. The child was born on or after 25 October 2023 and was under 18 at some point in the year.
3. The interest or rent you paid is more than the HK$100,000 basic ceiling.
4. You elect in writing to use the additional ceiling.

The additional deduction is available for 19 years of assessment in total. For home loan interest it stops once the basic deduction has been allowed for 20 years, and a married couple who rent share one HK$20,000 between them.

Retirement, insurance and medical deductions

Mandatory MPF contributions. Mandatory contributions to an MPF scheme, or contributions to a recognised occupational retirement scheme, are deductible up to HK$18,000 a year. The cap applies to your total, so two jobs with two schemes still produce one HK$18,000 deduction, and ordinary voluntary contributions are not deductible.

Tax deductible voluntary contributions (TVC) and qualifying deferred annuity premiums. These two share a combined cap of HK$60,000. TVC must be paid into a TVC account in your own name, and an annuity counts only if the Insurance Authority has certified the policy as a qualifying deferred annuity policy. If you have both, the TVC is deducted first. The trade-off is access: the MPF Schemes Authority states that TVC can only be withdrawn at age 65, apart from the statutory grounds for early withdrawal.

Voluntary Health Insurance Scheme (VHIS). Qualifying VHIS premiums are deductible up to HK$8,000 per insured person, with no limit on the number of people. The insured person can be you or a specified relative: your spouse, or a parent, grandparent, child or sibling of either of you who meets age, education or disability tests similar to those for the allowances. Only the premium for the certified VHIS plan counts, not any life cover bundled with it.

Assisted reproductive services. Since 2024/25, assisted reproductive service expenses are deductible up to HK$100,000 a year. The services must be received for medical reasons and provided at a centre licensed by the Council on Human Reproductive Technology. A married couple share one HK$100,000 cap and can decide how to split it.

Self-education, donations and work expenses

Self-education. Self-education expenses of up to HK$100,000 a year cover tuition and examination fees for a course taken to gain or keep a qualification for current or planned employment. The course must come from a recognised education provider or a trade, professional or business association, so private tutors do not qualify. A refund from your employer or the Continuing Education Fund reduces the claim, and you claim in the year you paid, even if the course starts later.

Approved charitable donations. Donations of money to a charity exempt from tax under section 88 of the Inland Revenue Ordinance, or to the Government for charitable purposes, are deductible if they total at least HK$100 for the year. The deduction is capped at 35% of your income after allowable expenses. Raffle tickets, charity show tickets and purchases at bazaars do not count, and a spouse can claim any balance you cannot use.

Outgoings and expenses. Employees can deduct expenses incurred wholly, exclusively and necessarily in producing their employment income, but nothing domestic, private or capital. The test is strict, and the IRD sets out what usually qualifies in its Departmental Interpretation and Practice Note No. 9 on major deductible items under salaries tax.

Elderly residential care: a deduction instead of the parent allowance

If you or your spouse pay a residential care home for a parent or grandparent, the elderly residential care deduction is capped at HK$100,000 per parent or grandparent for 2025/26 and HK$110,000 from 2026/27. The parent or grandparent must be 60 or over, or eligible under the Disability Allowance Scheme, and the home must be in Hong Kong and licensed (or exempted) under the relevant care home or healthcare legislation. Medical expenses, and personal spending the home pays on the resident's behalf and then recovers, are excluded.

The deduction replaces the dependent parent allowance for that person rather than adding to it, and where both are claimed, the deduction takes priority. GovHK's example: paying HK$60,000 in care fees in 2025/26 produces a HK$60,000 deduction, against a HK$50,000 allowance. Only one person can claim for each parent or grandparent each year, so family members contributing to the fees have to agree who claims, or no deduction is allowed.

How to claim on your tax return

Allowances and deductions are claimed on the BIR60 for the year concerned, in the parts shown in the deductions table, with personal allowances in Part 12. The IRD's BIR60 completion notes explain each part, including the boxes for the additional home loan interest or rent ceiling and when a spouse has to sign to agree.

• No attachments. Receipts are not sent with the return, but the IRD can review a claim, so keep the records for six years after the end of the year of assessment.
• Missed a claim. A written claim for an allowance can be made up to six years after the end of the year concerned, using Form IR831. Late claims for VHIS premiums, annuity premiums and TVC also go on Form IR831 within the same six years; a late elderly residential care claim uses Form IR6071.
• The 2026/27 figures already count. The IRD applies the 2026/27 amounts when it computes 2026/27 provisional salaries tax, which is charged alongside the 2025/26 final assessment.

When a tax advisor can help

For a single job with only the basic allowance and MPF contributions, the IRD's online tax calculator lets you check the result yourself. Advice is most useful when the facts are less tidy:

• a parent or grandparent who divides their time between Hong Kong and somewhere else, where the residence test turns on evidence;
• two earning spouses choosing between separate assessment, joint assessment and personal assessment;
• rental property or sole-proprietor profits, where personal assessment can change the result;
• employer-provided housing, relocation, or a year spent partly outside Hong Kong;
• income close to the standard rate zone, where allowances stop helping; and
• an IRD review or challenge of a claim already made.

A salaries tax advisor in Hong Kong can check which allowances and deductions your facts support and prepare the return. For wider work, such as property tax, a business you run on the side, or an objection to an assessment, browse tax advisors in Hong Kong. If the advisor is an accounting practice, the guide on how to choose a certified public accountant in Hong Kong explains which titles mean what.

This guide is general information, not tax or legal advice. Amounts and conditions change from year to year; for a specific claim, speak with a qualified tax advisor or check with the Inland Revenue Department.