Overview
Hong Kong’s 2026/27 Budget introduced several allowance increases effective for the Year of Assessment 2026/27. These include the Basic Allowance, Married Person’s Allowance, Child Allowance, Additional Child Allowance, and Dependent Parent/Grandparent Allowance, among others. (ird.gov.hk)
Key Allowance Changes
| Allowance | Prevailing (2025/26) | New (from 2026/27) |
|---|---|---|
| Basic Allowance | HK$132,000 | HK$145,000 (ird.gov.hk) |
| Married Person’s Allowance | HK$264,000 | HK$290,000 (ird.gov.hk) |
| Child / Additional Child Allowance (each of first to ninth child) | HK$130,000 | HK$140,000 (ird.gov.hk) |
| Dependent Parent / Grandparent (60+ or disabled) | HK$50,000 | HK$55,000 (ird.gov.hk) |
| Dependent Parent (55–59) | HK$25,000 | HK$27,500 (ird.gov.hk) |
Extended Child Allowance Window
From the 2026/27 year of assessment, taxpayers can claim Additional Child Allowance for newborns over two years instead of one. For children born on or after 1 April 2025, during their first two years by the end of assessment, taxpayers can claim twice the extra allowance for each such child. (ird.gov.hk)
Practical Tax Planning Tips
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Married couples should compare whether to file jointly or separately under personal assessment especially when dependent allowances or rental/business income are present. The cap on tax reduction for 2025/26 is HK$3,000 per case, so strategy matters. (ird.gov.hk)
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Families with multiple dependent children or aging parents — the higher allowances can generate substantial savings, especially when combined with other eligible deductions. Always verify documentation to qualify.
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New parents: If a child is born after 1 April 2025, you may benefit from two years of double Additional Child Allowance—plan timing of income recognition or employment changes accordingly.
Example Scenario
- Scenario A: A married couple with two children (one newborn born May 2025, the other 3 years old) and a dependent grandparent aged 62. Under the new Budget: Child Allowance is HK$140,000 each; dependent parent/grandparent allowance HK$55,000 (for 60+). For the newborn, they can claim additional child allowance over two years. Combined, the family’s tax base can reduce by over HK$330,000 just from allowances. Comparatively, under the 2025/26 allowances, their deductions would have been lower by tens of thousands.
Actionable Advice
- Check your tax return elections—ensure that relevant dependents are properly claimed and that additional child allowances are extended where eligible.
- Adjust provisional tax liability—allowances affect both final and provisional salaries/profits tax; make sure provisional payments reflect the new rates.
- Keep proper documentation—marital status, birth certificates, dependency proof matter.
- Forecast tax scenarios—if anticipating changes in income, marriage, or dependents, map both old vs new allowance impacts.
Bottom Line
Hong Kong’s latest budget affords important relief for individuals and families via boosted allowances and extended periods for child-related benefits. With strategic planning—especially in family or life event contexts—eligible taxpayers can significantly reduce their effective tax burden using the new rules.