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It's the tax season again in Hong Kong, and calculating the tax payable always be a challenge to many citizens. However, you have to deal with the tax inevitably. Paying taxes would become so much easier if there is an automatic calculator! In fact, the government has a salaries tax calculator, which specifying details such as salaries tax rates and payment methods in Hong Kong. Making good use of the government's salaries tax calculator can be very helpful when estimating the tax payable. In this article, we will take Year of Assessment 2024/25 as an example to help you understand the function of Hong Kong tax calculator, salaries tax rates, allowances, methods of filing and paying taxes, etc. Hope this introduction can help you in dealing with personal taxes in Hong Kong!
In Hong Kong, the salaries tax rates can be divided into progressive tax rate and standard tax rate, depending on your net chargeable income.
Here is the tax rates for the Year of Assessment 2024/25:
On the First $50,000：2%
On the Next $50,000：6%
On the Next $50,000：10%
On the Next $50,000：14%
Remainder：17%
If the salaries tax you need to pay under the progressive tax rate is higher than the standard tax rate, you can simply pay the tax by using the standard tax rate.
For the Year of Assessment 2024/25, the two-tiered Standard Rates is:
On the first $5,000,000 of net income：15%
Remainder：16%
The calculation method for salaries tax using progressive tax rates involves dividing your net chargeable income into different tiers, then calculating the tax for each tier based on the corresponding salary tax rate. If needed, you can use the salaries tax calculator provided by the Inland Revenue Department to estimate the tax, making it easy to deal with the tax problem!
Salaries Tax Calculator for the Year of Assessment 2024/25：https://www.ird.gov.hk/eng/ese/st_comp_2024_25/stcfrm.htm
The Inland Revenue Ordinance in Hong Kong stipulates certain tax allowances to help taxpayers reduce their tax burden. The mentioned tax calculator already includes these allowances. You just need to input the relevant amounts into the tax calculator!
Basic Allowance
The basic allowance is $132,000 for each individual. This means that your net chargeable income for salaries tax is calculated by subtracting the individual basic allowance from your assessable income. The tax calculator has already pre-set this deduction for you, so you don't need to worry about where to make this adjustment. It is automatically taken into account in the calculation.
Married Person's Allowance
For married individuals who are maintaining or supporting a spouse, you can enjoy a married person's allowance of $264,000 by selecting the "Married" option under marital status in the tax calculator. If you claim the married person's allowance, you cannot simultaneously claim the basic allowance.
Child Allowance
If you have a child, you can benefit from a child allowance by entering the number of children in the tax calculator. The child allowance applies to the first to ninth child and is set at $130,000 per child.
Dependent Parent and Dependent Grandparent Allowance
If you are maintaining parents or grandparents aged 55 or above, you can benefit from an allowance. Simply enter the number of parents or grandparents you are supporting into the tax calculator. For those aged 55 or above but below 60, the allowance is $25,000. For those aged 60 or above, the allowance is $50,000.
Deduction for Home Loan Interest
If you are repaying a home mortgage, you can deduct the home loan interest (HLI) from your net assessable income under salaries tax. Simply enter the actual amount of home mortgage interest in the "Home Loan Interest" field of the tax calculator to calculate the related tax deduction. However, eligibility criteria must be met, and for detailed information, please refer to the Inland Revenue Department's website.
Long-term Saving Plans/MPF and Others
In addition to the mandatory contributions to the Mandatory Provident Fund (MPF), premiums for qualified annuities and medical insurance can also be considered as tax exemptions. Simply enter the correct amounts in the relevant fields of the tax calculator to calculate the associated tax benefits.
Additionally, there are some tax allowances that are not fully listed here. For more details, you can refer to the government's tax calculator.
Q: How to file taxes?
A: Hong Kong taxpayers generally need to file taxes in May to June each year, this period is known as the "tax filing season". You can choose to file taxes electronically or on paper form. It is recommended to use the electronic filing method, which is more convenient and it automatically grants a one-month extension period for submission. However, it is essential to beware of the salaries tax rates and allowances for the respective year of assessment. If you want a clearer understanding of the tax rates and allowances for the year, you can use the government's salaries tax calculator to budget before submitting your tax return.
Q: How do I pay salaries tax?
A: You can use various payment methods to settle your salaries tax, including online, phone, ATMs, mail, or in-person at the post office. After calculating the salaries tax payable amount through the salaries tax calculator, remember to make the payment on time to avoid penalties.
Q: How to calculate salaries tax?
A: Calculating salaries tax can be complicated, so it is recommended to use the government's tax calculator mentioned above. The government's tax calculator is equipped with the updated information of salaries tax rate, so it can avoid errors effectively. Using unofficial tax calculators may lead to incorrect results, so it is suggested to use the salaries tax calculator provided by the Inland Revenue Department.
Q: Can I delay the payment of salaries tax?
A: In general, Hong Kong taxpayers are required to pay taxes based on the specified dates and the applicable salaries tax rates. If you are unable to pay tax on time, it is recommended to contact the Inland Revenue Department promptly for payment arrangements or apply for deferment.
Q: What are the consequences of late tax payment?
A: According to Inland Revenue Ordinance, if taxes are not paid by the designated date stipulated on the "Notice of Assessment", it is considered as overdue tax. If the first instalment of tax specified on the notice is not paid on time, the second instalment becomes due immediately, and the entire unpaid tax amount is treated as "overdue tax." The tax authority will promptly pursue collection, impose a 5% surcharge, and take legal actions if necessary. If the tax remains unpaid for 6 months, an additional 10% surcharge will be imposed. Therefore, it is important to enable effective financial planning before the tax season by using the salaries tax calculator to learn about the tax rates and allowances applicable.
Insufficient cash flow for paying taxes is found after using the salaries tax calculator? You may consider to apply for personal loan if you need any financial assistance. However, before applying for a loan, it's crucial to pay attention to the size and accreditation of the loan company. Avoid choosing unlicensed companies and opt for a trustworthy money lender like Promise. Promise personal loan with low-interest rates can help you manage unexpected expenses and maintain your cash flow. If you're facing financial challenges during the tax season, Promise is here to support you. You can apply Promise low-interest personal loan conveniently without show up in person*. The repayment period can be up to 84 months, with no penalties or additional fees for early repayment, which is flexible and convenient! Click here to learn more about Promise personal loan.
In conclusion, we hope this article has provided you an in-depth understanding of Hong Kong salaries tax calculation, tax allowances, filing tax returns, and payment methods. Remember to manage your personal taxes in a timely manner, pay taxes on time, and utilise the salaries tax calculator for a clear understanding of tax rates and tax payable. If you face any financial challenges, consider seeking assistance from Promise!
