- Understand Hong Kong's tax system and reporting requirements, and learn how to make the most of various tax deductions and allowances.
- Manage your finances effectively by planning your finances in advance to account for future tax expenditures, such as allocating funds to invest in low to medium-risk products to generate returns or passive income to "offset" some of your tax expenses.
- Exploring alternative tax payment methods, such as tax loans or using specific online wallets and credit cards, may offer additional benefits, but it is essential to carefully assess the associated risks.
- Connect with our SFC-licensed financial advisors to assist you in making informed financial decisions and achieving your long-term financial goals.
As April approaches, most Hong Kong residents have already completed the first instalment of their tax payments and are about to pay the second instalment while preparing for the next tax year's filing.
If you’re feeling the pressure already, it’s not too late to learn how you can maximise your tax allowance. Start by learning more about Hong Kong's tax filing schedule, assessment standards, and various available tax deductions and allowances. It provides insights on how to use idle funds to generate returns and ease financial pressure, helping you plan ahead and reduce your tax burden.
Understanding Hong Kong's tax system and reporting requirements
Who needs to file taxes in Hong Kong?
In Hong Kong, anyone aged 18 or above with taxable income is required to file taxes. This includes employees, self-employed individuals, property owners, and investors. Even if your income is below the taxable threshold, you still need to complete a tax return. According to Hong Kong's tax system, only income arising in or derived from Hong Kong is subject to tax, known as the "territorial principle".
Tax filing, assessment, and payment schedule
The tax year in Hong Kong typically runs from 1 April to 31 March of the following year. The Inland Revenue Department (IRD) usually issues tax returns in early May, and taxpayers need to submit them by early June. If you are self-employed or have business income, the deadline may be extended to August. The notice of assessment is generally issued between October and December, with the tax payment deadline usually in January of the following year. Notably, Hong Kong adopts a staggered tax payment system, with some tax payments potentially due in two instalments in January and April of the following year.
Taxes must be paid by the due date specified in the assessment notice. If payment is late, the IRD will immediately take legal action to recover the outstanding tax. If the first instalment is not paid on time, a 5% surcharge will be added to the total outstanding tax (including the second instalment), and the second instalment will become immediately due. If the tax remains unpaid six months after the due date, an additional 10% surcharge will be imposed.
Standard tax rates and thresholds
Hong Kong employs a progressive tax rate system (ranging from 2% to 17%, with a standard rate of 15%), but also offers the option to choose the standard rate. The amount of tax payable is calculated based on your net chargeable income at progressive rates, or on your net income (before deductions) at the standard rate, whichever is lower.
According to the latest 2025 Budget, salaries tax and personal assessment for the year of assessment 2024/25 will be reduced by 100%, up to a ceiling of HK$1,500. This means that Hong Kong residents will only need to pay tax if their tax payable for the 2024/25 year exceeds HK$1,500. This means that Hong Kong residents will only need to pay tax if their tax payable for the 2024/25 year exceeds HK$1,500. The tax waiver ceiling has been dropped sharply from HK$20,000 (2018/19) to HK$1,500 – a 90% reduction over six fiscal years. With relief margins narrowing, taxpayers may find it helpful to review their liabilities early, considering allowable deductions and instalment arrangements to better manage cash flow.
How to calculate allowances, deductions, and taxes
Hong Kong offers various salaries tax allowances and deductions, such as basic allowances, child allowances, and dependent parent, brother, or sister allowances, which further reduce the amount of tax payable. Utilising these benefits not only saves you money but also helps you plan your finances for the future. You can also try to use a tax calculator to estimate your taxes based on your salary.
Allowances: Basic allowance and family-related allowances
Read more: Financial planning through life stages
Tax deductions: Personal education, "tax deduction trio", charitable donations, and housing-related deductions
Read more: 2025/26 Hong kong Tax Facts and Figures, PwC HK
Start your tax planning early
In addition to maximising tax deductions, early financial planning is key to reducing your tax burden. By strategically allocating funds, you can generate returns or passive income to help cover future tax payments. This approach not only prepares you for future tax relief but also strengthens your overall financial position.
Endowus advocates goal-based investing, which involves allocating assets based on the characteristics of the final goal. For example, for the goal of "tax relief," which is a necessary expenditure with regular timing, you might consider investing a sum of money in low to medium-risk products, such as the CashUp portfolios and IncomeUp portfolios. By making good use of idle cash to achieve higher yields, you can reduce the tax burden.
You can also choose monthly contributions to further reduce income volatility and minimise the impact on your life. Tax planning is an ongoing process that requires regular review and adjustment to adapt to changing regulations and personal circumstances.
For prudent investors, check our Endowus Fixed-Rate Savings (FRS). Partnered with trusted banks in Hong Kong, FRS offers industry-leading corporate fixed return rates with interest rates of more than 4% p.a.* for deposits from US$10,000 at 1, 3, or 6-month tenors.
More ways to manage your taxes
Tax season loans
Tax season loans (also known as "tax loans") are personal loan products offered by banks and lending institutions to ease the burden of paying taxes during the tax season. They are popular with some residents due to their lower interest rates during the tax season (usually below 2%), lack of specific purpose, and longer repayment terms (some products have repayment terms of up to 60 months).
Paying taxes with e-wallets and credit cards
Using certain e-wallets and credit cards to pay taxes may offer additional cash rebates or reward points, offsetting some of the tax expenses. Additionally, credit card companies offer interest-free instalment plans, allowing you to repay tax payments gradually over several months, thus reducing the burden of a large one-time payment.
Potential risks of tax payment methods
While tax loans and credit card payments can provide a buffer period, they also carry risks. If you cannot repay the loan or credit card balance on time, compounded interests can lead to greater financial difficulties. It may be a short-term solution but should not be relied upon in the long run. When managing your taxes, carefully assess your financial situation and long-term impact.
Read more:
- Your 5-step guide to financial planning
- 4 Tips to make your year-end bonus go the extra mile
- Here's how you can prioritise your financial goals
*Fixed-Rate Savings (FRS) is not an investment product, collective investment scheme, or fixed deposit product. It is not protected by the Deposit Protection Scheme. As part of the launch promotion, the indicative net interest rate does not include the Endowus Fee of 0.10% p.a..
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