Tax Update | Adjustments to Hong Kong Salaries Tax and Personal Assessment Allowances — Effective from 2026/27

GIL:

The new allowances will officially take effect from 2026/27. In practice, the new allowances will first be reflected in the calculation of provisional tax for 2026/27. Taxpayers therefore do not need to wait until the final assessment to see the relevant effect.

GIL:

In general, the amount will be reduced, as the Inland Revenue Department will apply the higher allowances when calculating provisional tax for 2026/27. As a result, the provisional tax payable will be decreased.

GIL:
No, generally.

The Inland Revenue Department will automatically calculate tax based on the new allowances. Taxpayers only need to complete their 2025/26 tax returns as usual.

You should only consider applying for a provisional tax adjustment in the following circumstances:

• Your income has significantly decreased or increased; or

• There has been a major change in your family circumstances, such as the birth of a child or the addition of a dependent.

GIL:

This is a long-term structural tax reduction measure. By increasing the allowances, the relevant adjustments will continue to apply from the 2026/27 year of assessment onwards.

This differs from a one-off tax rebate and will have a longer-term impact on taxpayers’ future tax burden.

GIL:
Generally, the following groups are expected to benefit more significantly from the tax reductions:

• Families with children, especially newborn children

• Individuals supporting parents, grandparents or maternal grandparents

• Middle-income earners, particularly those with monthly income of around HK$20,000 to HK$40,000