Tax guide 2025: calculation, allowances, and management tips
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Tax guide 2025: calculation, allowances, and management tips

Updated
26 Mar
2025
published
26 Mar
2025
  • 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.

Month Event
May-June Receive tax returns
June–July Submit tax returns
Oct–Dec Receive tax assessment notices
Jan (of the following year) Pay the first instalment
Apr (of the following year) Pay the second instalment

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.

Source: HKSAR government

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.

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

Tax allowance form
Item Details Allowance (2024/25 Tax Year)
Basic allowance - HK$132,000 (individual), HK$264,000 (married couple)
Family-related allowances Child allowance HK$130,000 (per child)
Dependent sibling allowance HK$37,500 (per sibling)
Dependent parent/grandparent Allowance Dependent parent/grandparent allowance (aged 60 or above, or eligible for a government disability allowance) HK$50,000(additional HK$50,000 for eligible cases
Dependent parent/grandparent allowance (aged 55-59) HK$25,000(additional HK$25,000 for eligible cases
Single parent allowance - HK$132,000
Disabled person allowance - HK$75,000
Disabled dependant allowance (per dependant) - HK$75,000

Read more: Financial planning through life stages

Tax deductions: Personal education, "tax deduction trio", charitable donations, and housing-related deductions

Tax allowance form
Item Details Deduction (2024/25 Tax Year)
Personal education expenses - HK$100,000
Elderly residential care expenses - HK$100,000
Housing-related deductions Home Loan Interest Basic: HK$100,000
Additional: HK$20,000(for eligible cases
Rental Deduction Basic: HK$100,000
Additional: HK$20,000(for eligible cases
"Tax deduction trio" Mandatory contributions to recognised retirement schemes HK$18,000
Qualifying premiums under voluntary health insurance scheme (per insured person) HK$8,000
Qualifying annuity premiums and tax-deductible MPF voluntary contributions HK$60,000
Approved charitable donations Married persons (not living apart) can claim deductions for their spouse's approved charitable donations Up to: (Income – deductible expenses – depreciation allowances) x 35%
Assisted Reproductive Services Expenses - HK$100,000

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 investors who prefer lower risk, 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:

*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..

Risk Warnings

Investment involves risk. Past performance is not an indicator nor a guarantee of future performance or returns. Projected performance or returns is not guaranteed to materialise. The value of investments and the income from them can go down as well as up, and you may not get the full amount you invested.

Rates of exchange may cause the value of investments to go up or down. Individual stock performance does not represent the return of a fund.

General risk warnings relating to collective investment schemes

Before making an investment decision, you are reminded to refer to the relevant prospectus/ offering document for specific risk considerations and related fees and charges.

Funds are not a bank deposit and not capital guaranteed, and is subject to investment risks, including the possible loss of the principal amount invested.  

Some of the funds also involve derivatives. Do not invest in them unless you fully understand and are willing to assume the risks associated with them.

Opinions

Any forward-looking statements, prediction, projection or forecast on the economy, stock market, bond market or economic trends of the markets contained in this material are subject to market influences and contingent upon matters outside the control of Endowus HK Limited (“Endowus”) and therefore may not be realised in the future. Further, any opinion or estimate is made on a general basis and subject to change without notice. In presenting the information above, none of Endowus HK Limited, its affiliates, directors, employees, representatives or agents have given any consideration to, nor have made any investigation of the objective, financial situation or particular need of any user, reader, any specific person or group of persons. Therefore, no representation is made as to the completeness and adequacy of the information to make an informed decision. You should carefully consider (i) whether any investment views and products/ services are appropriate in view of your investment experience, objectives, financial resources and relevant circumstances. You may also wish to seek financial advice through a financial advisor or the Endowus platform and independent legal, accounting, regulatory or tax advice, as appropriate.

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Complex Products

Some of the funds contained in this article are complex products and investors should exercise caution when investing in these products. Though these products have been authorised by the SFC, authorization does not imply official recommendation. SFC authorization is not a recommendation or endorsement of a product nor does it guarantee the commercial merits of a product or its performance.

This advertisement has not been reviewed by the Securities and Futures Commission or any regulatory authority in Hong Kong.

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