Tax Planning
How the 2026-27 Hong Kong Budget Reshapes Personal Allowances: What You Must Know
A sweeping increase in personal allowances and a one-off tax cut in Hong Kong’s 2026-27 Budget offers taxpayers substantial relief—here’s how much you’ll save and how to make sure you benefit.
By NomadicTax Research Team • 5-8 min read • September 13, 2026
## What’s changing in the 2026-27 Budget for Hong Kong
The Financial Secretary’s 2026-27 Budget introduced major changes that take effect from the year of assessment 2026/27:
- A **one-off tax reduction** of **100%** of the *final* profits tax, salaries tax, and personal assessment for the year of assessment 2025/26—capped at HK$3,000 per case. ([ird.gov.hk](https://www.ird.gov.hk/eng/faq/budget2026_27.htm?utm_source=openai))
- **Higher allowances**: Basic, married person’s, single parent, child, additional child, dependent parent/grandparent, and elderly residential care expense deductions are all increased. For example, basic allowance rises from HK$132,000 to HK$145,000, married person’s from HK$264,000 to HK$290,000. ([ird.gov.hk](https://www.ird.gov.hk/eng/ppr/archives/26030402.htm?utm_source=openai))
- The claim period for **additional child allowance for newborns** is extended from one year to **two years**. ([ird.gov.hk](https://www.ird.gov.hk/eng/ppr/archives/26030402.htm?utm_source=openai))
## What this means in practice: savings examples
| Scenario | Pre-Budget (2025/26) tax & allowances | Post-Budget (2026/27 & one-off) situation |
|---|---|---|
| A single taxpayer with one child, dependent parent aged 65 | Basic allowance HK$132,000 + child allowance + dependent parent allowance | Basic allowance HK$145,000; child allowance HK$140,000; dependent parent allowance HK$55,000; plus potential one-off HK$3,000 reduction on 2025/26 final tax. |
| Married couple both earning salaries, with two children under 5 | Married person’s allowance HK$264,000; child allowances 2×HK$130,000 | Married person’s HK$290,000; child allowances 2×HK$140,000; etc. |
A worked example provided by the IRD shows a married couple could reduce tax payable from HK$17,960 to a refund of HK$7,780 when combining the allowance increases with the one-off reduction. ([ird.gov.hk](https://www.ird.gov.hk/eng/pdf/2026/example2627.pdf?utm_source=openai))
## Actionable guidance for taxpayers
1. **File as usual** for 2025/26; the one-off reduction will be reflected in your final assessment by IRD automatically, subject to the cap. ([ird.gov.hk](https://www.ird.gov.hk/eng/ppr/archives/26022508.htm?utm_source=openai))
2. **Review your dependents and allowances**—if you have dependent parents/grandparents aged 55-59 or 60+, or newborns, plan accordingly to maximize new allowances. For instance, dependent parent aged 55-59: allowance moves from HK$25,000 to HK$27,500; aged 60+: from HK$50,000 to HK$55,000. ([ird.gov.hk](https://www.ird.gov.hk/eng/faq/budget2026_27.htm?utm_source=openai))
3. **Estimate your elderly residential care expenses**: ceiling increases from HK$100,000 to HK$110,000 per eligible person. Expenses beyond the old cap, but within new cap, may bring deduction. ([ird.gov.hk](https://www.ird.gov.hk/eng/faq/budget2026_27.htm?utm_source=openai))
4. **Understand timing for newborns’ allowances**: The extension to two years helps parents of newborns claim additional child allowance for longer. If your child was born in 2025/26, you may now benefit. ([ird.gov.hk](https://www.ird.gov.hk/eng/ppr/archives/26030402.htm?utm_source=openai))
5. Use the **IRD’s tax calculator** on GovHK to compare scenarios under old vs new allowances/tax, to assess whether personal assessment (if you have profits or rental income) or joint vs separate is better. ([ird.gov.hk](https://www.ird.gov.hk/eng/faq/budget2026_27.htm?utm_source=openai))
## Summary: Who gains most?
- Families with children, especially newborns, due to higher child allowances and extended claim period.
- Those supporting elderly parents/grandparents because of higher dependent parent allowances.
- Individuals incurring elder care expenses near old cap—extra deduction possible.
- Businesses/entities for 2025/26 profit tax will benefit from the one-off reduction.
With inflation and cost of living pressures, these adjustments can offer significant relief if you structure deductions and allowances correctly under the new rules.