Why are there two tax rates in Hong Kong?

Hong Kong charges salaries tax at the lower of two amounts: the progressive rates (2 to 17 percent) applied to net chargeable income after allowances, or the standard rate (15 percent) applied to net total income before personal allowances. High earners typically pay the standard rate.

What is the basic allowance?

The basic personal allowance for 2023/24 is 132,000 HKD. It is deducted from your net income to get net chargeable income, on which the progressive rates apply. Married and dependant allowances can increase this.

Is MPF tax-deductible?

Yes. Mandatory MPF contributions are deductible from your assessable income up to an annual cap of 18,000 HKD. This reduces the income on which salaries tax is computed under both methods.

What are the progressive bands?

For 2023/24 the progressive bands tax the first 50,000 HKD at 2 percent, the next 50,000 at 6 percent, the next 50,000 at 10 percent, the next 50,000 at 14 percent, and the remainder at 17 percent. They apply to net chargeable income.

Does this include the tax reduction (rebate)?

Government one-off tax reductions are announced each Budget and applied after the assessment. They are not part of the standard formula, so this estimate excludes any year-specific rebate.

Hong Kong Salaries Tax Calculator

Hong Kong salaries tax is unusual: it charges the lower of two calculations — progressive rates on income after allowances, or a flat standard rate on income before personal allowances. This calculator runs both methods after your basic allowance and deductible MPF, then shows which one you pay.

How it works

First, net income is income minus deductible MPF (capped at 18,000):

progressive: net chargeable = net income − basic allowance
  bands: 2% / 6% / 10% / 14% on each 50,000, then 17% on the rest
standard: 15% × net total income (before personal allowance)
tax payable = min(progressive tax, standard tax)

The progressive method favours lower and middle incomes because of the tax-free allowance and graduated bands. The standard rate caps the effective rate at 15 percent, which benefits high earners. Hong Kong automatically applies whichever is lower.

Example

On income of 600,000 HKD with 18,000 MPF deducted: net income is 582,000. Progressive net chargeable is 582,000 − 132,000 = 450,000, taxed as 1,000 + 3,000 + 5,000 + 7,000 + (250,000 × 17%) = 58,500. Standard is 582,000 × 15% = 87,300. You pay the lower figure, 58,500 HKD.

Notes

The 2023/24 allowance and bands are used. Married, child, and dependent-parent allowances raise the tax-free amount under the progressive method. One-off Budget rebates are excluded.