Tax Planning
Maximizing Tax Allowances in Hong Kong: What’s New & How to Plan
With the 2026-27 Budget introducing higher allowances and one-off tax reductions in Hong Kong, individuals and couples can take strategic steps now to boost savings. Learn how.
By NomadicTax Research Team • 5-8 min read • August 24, 2026
## Background: Changes in the 2026-27 Budget
Hong Kong’s Budget for 2026-27, passed in mid-2026, introduced several key changes to **income tax allowances and reliefs**, effective for the year of assessment **2026/27**. These include:
• Married Person’s Allowance increased from **HK$264,000 to HK$290,000**. ([ird.gov.hk](https://www.ird.gov.hk/eng/ppr/archives/26030402.htm?utm_source=openai))
• Basic allowance (single parent allowance) up to HK$145,000; dependent parent/grandparent allowances increased; deduction ceiling for elderly residential care expenses raised to HK$110,000. ([ird.gov.hk](https://www.ird.gov.hk/eng/ppr/archives/26030402.htm?utm_source=openai))
• A **one-off 100% tax reduction** for salaries tax, personal assessment, and profits tax for the **2025/26** year, subject to a cap of **HK$3,000** per case. ([ird.gov.hk](https://www.ird.gov.hk/eng/ppr/archives/26030402.htm?utm_source=openai))
## How to Plan in Light of the New Allowances
Here are actionable strategies individuals and households can use:
### 1. Re-evaluate your tax filing status
If you’re married but previously claimed allowances separately, compare joint assessment (or married person’s allowance) now with higher thresholds—it may lead to significant savings. Larger households with dependent parents should also recalibrate deductions now that the amounts have increased.
### 2. Elderly Care Costs: Documentation is Key
With the deductible ceiling for **elderly residential care expenses** raised to HK$110,000, ensure invoices, receipts, and eligibility of institutions are well documented. Keep in mind whether the dependents are aged categories defined (60+, or 55–60). Failure to properly document may result in disallowed deductions.
### 3. Leverage One-off Tax Reduction
The one-off 100% reduction for **2025/26** salaries tax etc., capped at HK$3,000 per taxpayer item, can still be maximized if you ensure your filings for that year are correct and all eligible allowances inserted. If you missed earlier filings, check if amended returns are allowed.
### 4. Timing & Income Shifting
If you expect other increases (e.g. bonuses or income spikes) in **2026/27**, consider timing income recognition or expense deductions so that higher allowances fully cover net income, reducing marginal tax. This is especially useful for business owners or employees with variable pay.
### Example Scenario
A married couple with two dependent parents aged 65 and 58. Under old thresholds, they claimed the basic married allowance and dependent parent/grandparent allowances accordingly. With increases: married allowance is now **HK$290,000**, and dependents aged 60+ get HK$55,000 each. Elderly residential care expense deduction allows more if either parent is in care. Combined, these changes could reduce taxable income by tens of thousands of HK dollars.
## Caveats & Compliance Reminders
- All claims must be well-substantiated—proper documentation is essential.
- Certain reliefs are non-transferrable—e.g. married person’s allowance only by joint assessment.
- The one-off 2025/26 reduction does **not** apply to 2026/27—so plan carefully ahead.
## Summary
By understanding how allowances have risen and using them deliberately—joint assessment, maximizing deductions, and aligning income/timing—you can materially reduce your Hong Kong tax liability. Review your fiscal year, gather supporting documents, and if uncertain, consult with a tax adviser to align these updates with your financial planning.