Summary of Budget Tax Changes in 2026/27
The 2026/27 Hong Kong Budget included several new tax measures that became law via the Inland Revenue (Amendment) (Tax Concessions, Concessionary Deductions and Allowances) Ordinance 2026, gazetted on 22 May 2026. These include:
- One-off 100% reduction in profits tax, salaries tax, and tax under personal assessment for the year of assessment 2025/26, capped at HK$3,000 per case. (ird.gov.hk)
- Increasing tax allowances from 2026/27, including basic allowance (HK$132,000 → HK$145,000), married person’s allowance (HK$264,000 → HK$290,000), child and additional child allowances (HK$130,000 → HK$140,000), and dependent parent/grandparent allowances boosted. (ird.gov.hk)
- Higher deduction ceiling for elderly residential care expenses: from HK$100,000 to HK$110,000. Also, extension of additional child allowance claim for newborns from one year to two years. (ird.gov.hk)
Who Benefits Most?
| Person Type | What’s New and Advantageous |
|---|---|
| Families with young children | Child allowance increased; longer period for claiming additional child allowance for newborns (two years). Saves tax for parents of children born after 1 April 2025. (ird.gov.hk) |
| Individuals with elderly dependents | Higher allowance for dependent parents/grandparents; more deductions for residential care. Saves for those supporting older parents. |
| Single and married individuals | Basic and married person’s allowance increased. Helps both solo earners and dual-income households. |
| Businesses | One-off profits tax reduction for 2025/26 helps cash flow; value less for highly-profitable ones but still a benefit. |
Planning Actions to Take Now
- Check eligibility for one-off tax reduction: If you pay salaries tax, profits tax, or under personal assessment for 2025/26, this automatically applies. No need to apply separately. Ensure your returns are filed by relevant deadlines. (ird.gov.hk)
- Make use of the new allowance amounts starting 2026/27: Budget for salaries, rental income, MPF, etc., adjust with the updated basic, child, dependent parent allowances. (ird.gov.hk)
- Plan childcare timing around birth dates: If a child is born on or after 1 April 2025, you get the extended two-year additional child allowance. ─ Keeping proof of birth and filing claims. (ird.gov.hk)
- Explore elderly care deductions: If you have elderly dependents in residential care, note the higher cap and update records to claim the deduction. Documents from care facility required. |
- Businesses and profits tax: If running a business liable to profits tax, the one-off relief for 2025/26 may help; plan provisional tax payments accordingly. |
Example
A married couple with two children and one elderly dependent (aged 65) had HK$600,000 in salaries and invested income in 2025/26. Under 2025/26, they get the one-off tax reduction of up to HK$3,000, new allowances from 2026/27 will increase child and dependent parent allowance. For 2026/27, their basic allowance plus child and parent allowances likely reduce taxable income significantly—saving thousands.
Other Planning Tips
- Monitor corporate treasury centre (CTC) regime consultation proposals: if you have intra-group financing or treasury functions, you may benefit under enhanced concessions under the proposed tiered regime. (ird.gov.hk)
- Use professional tax advisor to structure your declarations optimally (e.g., deciding whether personal assessment helps).
- Maintain accurate documentation for new allowances and deductions to avoid audits or rejection of claims.
Hong Kong’s 2026/27 budget changes deliver tangible relief for employees, parents, and care givers. Taking action early to claim allowances and understanding eligibility can maximize savings.