Knowing your salary tax rate is important for good financial planning in Hong Kong. Whether you work full-time, freelance, or are an expat, understanding how much of your income is taxed can help you avoid surprises and make the most of your take-home pay.
In 2025, the Hong Kong salary tax is still pretty much the same as before. However, it is always prudent to note the new tax bands, allowances, and reliefs. The guide gives you a good idea of the new salary tax scheme, who needs to pay, and how to work out your own rate.
If you’re a resident of Hong Kong or a newcomer to its taxation system, this article outlines all that you should know.
What is the salary tax rate in Hong Kong?
Your salary tax rate is the percentage of your income that you are required to pay as Salaries Tax under the Inland Revenue Ordinance (IRO) of Hong Kong. It comprises earnings from jobs, offices, and pensions in or coming from Hong Kong.
Main Ideas:
- Tax on salaries is among the three direct personal taxes of Hong Kong. The others are Profits Tax and Property Tax.
- It only covers profits earned in Hong Kong. It especially affects expats and remote workers.
- It is taxed either at progressive rates or at a flat rate, whichever is more beneficial to the individual.
Who needs to Pay Salaries Tax in Hong Kong?
Salaries Tax is a tax on every person who earns income from employment in Hong Kong. They comprise:
Eligibility:
- Hong Kong citizens
- Non-residents who earn income from services performed in Hong Kong
- Expatriates employed by Hong Kong-based companies
Income chargeable to Salaries Tax:
- Monthly salary and bonuses
- Commissions and housing allowances
- Employer-sponsored benefits (e.g., vacation trips, stock options)
- Hong Kong retirement pensions or benefits
Even if you don’t remain in Hong Kong indefinitely, you might still be liable for Salaries Tax if you receive income from employment in Hong Kong.
2025 Hong Kong Salary Tax Rates: Increasing the Tax Brackets
In 2025, Hong Kong still uses a tax system where higher incomes pay more taxes. Here’s a simple view of the current tax groups:
Net chargeable income = Gross income – Deductions – Allowances
Progressive Tax Rates for 2025:
|
Net Chargeable Income (HKD) |
Tax Rate (%) |
|
First $50,000 |
2% |
|
Next $50,000 |
6% |
|
Next $50,000 |
10% |
|
Next $50,000 |
14% |
|
Remainder |
17% |
Marginal vs. Effective Tax Rate:
- Marginal rate: Your tax rate on your last dollar of taxable income.
- Effective rate: Your average tax rate on all levels of income.
Example:
Your tax would be as follows if your net chargeable income was $300,000.
First $50,000 at 2% is $1,000.
The subsequent $50,000 at 6% is $3,000.
- Then $50,000 at 10% = $5,000
Then $50,000 at 14% is $7,000.
- The remaining $100,000 at 17% equals $17,000.
- Total tax = $33,000
- Effective tax rate = $33,000 / $300,000 = 11%
Standard Rate or Progressive Rate: Which Applies?
Hong Kong’s tax system makes sure that you pay the lower amount between:
- Standard Rate: 15% of net income (after deductions, before allowances)
- Progressive Rate: 2% to 17% of income you can be taxed on (after deductions and allowances).
Example Comparison:
|
Income |
Deductions |
Allowances |
Net Chargeable Income |
Tax (Progressive) |
Tax (Standard) |
|
$500,000 |
$50,000 |
$132,000 |
$318,000 |
~$30,300 |
$67,500 |
In this case, the progressive rate applies because it results in lower tax.
Allowances and Deductions That Reduce Your Salary Tax Rate
Hong Kong offers high personal allowances and deductions that reduce your net chargeable income and thus your tax bill.
Common Allowances:
- Basic allowance: HK$132,000
- Married person’s allowance: HK$264,000
- Child allowance: HK$120,000 for each child (first year), $100,000 thereafter
- Dependent parent/grandparent: $50,000 to $100,000 (depending on age and living situation)
Common Deductions:
- Mandatory Provident Fund (MPF) contributions (up to $18,000)
- Donations to charity (up to 35% of income)
- Home loan interest (up to $100,000/year, up to 20 years)
- Self-education costs
These reduce your effective tax rate on salary significantly, sometimes even to the extent of eliminating taxation for low-earners.
How to Work Out Your Salary Tax in 2025
Here is a straightforward step-by-step process:
- Gather all assessable income (salary, bonus, housing allowance, etc.)
- Subtract allowable expenses (e.g., MPF, donations). 3. Utilize allowances (basic, married, children, etc.)
- The result is your net chargeable income
- Apply progressive tax rates or calculate a 15% flat rate.
- Pay the lower of the two
Useful Tip: Obtain a rough estimate by using the IRD Tax Calculator.
Final Thoughts
Hong Kong’s Salaries Tax is simple, clear, and competitive compared to most other locations. By having the knowledge of the tax rates, deductions, and allowances, you can adhere to the regulations and improve your bottom line.
Regardless of whether you are a fresh hire, an experienced professional, or a freelancer in Hong Kong, knowing the 2025 salary tax rules can prove to be highly beneficial.
How FastLane HR Can Help
Tax season can be overwhelming—especially if you have several income sources, dependents, or cross-border employment. That’s where FastLane HR comes in. Here’s how we assist you in staying compliant and calm:
- Payroll and tax services specifically for businesses and individuals.
- Proper calculation of salary tax considering allowances and deductions.
- On-time filing of IR56B and other employer-mandated forms.
- Customized reports that help you plan and stay audit-ready. FastLane HR makes payroll and taxes easier for employees, HR personnel, and new companies.
Contact us today to have your 2025 tax season be seamless and hassle-free.