Tax Planning
Tax Planning in Hong Kong: Key 2026/27 Budget Measures You Should Use
Hong Kong’s 2026-27 Budget introduces tax reductions, raised allowances, and new deductions that can’t be ignored—especially for families, property investors, and high-income earners.
By NomadicTax Research Team • 5-8 min read • September 11, 2026
## 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](https://www.ird.gov.hk/eng/tax/budget.htm?utm_source=openai))
- **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](https://www.ird.gov.hk/eng/tax/budget.htm?utm_source=openai))
- **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](https://www.ird.gov.hk/eng/tax/budget.htm?utm_source=openai))
## 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](https://www.ird.gov.hk/eng/tax/budget.htm?utm_source=openai)) |
| **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
1. **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](https://www.ird.gov.hk/eng/tax/budget.htm?utm_source=openai))
2. **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](https://www.ird.gov.hk/eng/tax/budget.htm?utm_source=openai))
3. **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](https://www.ird.gov.hk/eng/tax/budget.htm?utm_source=openai))
4. **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. |
5. **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](https://www.ird.gov.hk/eng/ppr/archives/26072701.htm?utm_source=openai))
- 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.
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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.