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  Home >  Tax Information - Individuals/Businesses > 2026-27 Budget – Tax Measures

2026-27 Budget – Tax Measures

In his 2026-27 Budget, the Financial Secretary proposed the following measures:

The above measures have to be implemented through legislative amendments. Highlights of the measures and implementation details are set out in the following paragraphs.  Answers to frequently asked questions (FAQ) and illustrative examples showing how the proposed tax reduction would reduce taxpayers’ salaries tax and tax under personal assessment are also provided. It should be stressed that details of the measures are subject to change during the legislative process.

You may use the Tax Calculator provided in GovHK to calculate your salaries tax and tax under personal assessment if the proposed tax measures are implemented.

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Reducing profits tax, salaries tax and tax under personal assessment for the year of assessment 2025/26

The Financial Secretary proposed a one-off reduction of profits tax, salaries tax and tax under personal assessment for the year of assessment 2025/26 by 100%, subject to a ceiling of $3,000 per case.

For profits tax, the ceiling of the proposed tax reduction is applied to each business. For salaries tax, the ceiling is applied to each individual taxpayer; but for married couples jointly assessed, the ceiling is applied to each married couple (i.e. capped at $3,000 in total). For personal assessment, the ceiling is applied to each single taxpayer or married person who elects for personal assessment separately from his/her spouse. If a taxpayer elects for personal assessment jointly with his/her spouse, the tax reduction is capped at $3,000 for the married couple. 

The proposed tax reduction is not applicable to property tax. Individuals with rental income, if eligible for personal assessment, may be able to enjoy such reduction under personal assessment.

A taxpayer who is separately chargeable to salaries tax and profits tax can enjoy the proposed tax reduction under each of the tax types. For a taxpayer having business profits or rental income and electing for personal assessment, the reduction will be based on the tax payable under personal assessment. It might be different from the amount of tax reduction he/she would get if he/she was not assessed under personal assessment. The exact position will need to be assessed case by case.

To elect for personal assessment, eligible taxpayers should complete Part 7 of his/her tax return for individuals (BIR60) for the year of assessment 2025/26. Individuals having salaries income only, but no business profits and rental income, need not elect for personal assessment.

The proposed reduction will reduce taxpayers’ amount of tax payable for the year of assessment 2025/26. Taxpayers should file their profits tax returns and tax returns for individuals for the year of assessment 2025/26 as usual. Upon enactment of the relevant legislation, the Inland Revenue Department will effect the reduction in the final assessment. For any final assessment for the year of assessment 2025/26 issued before the enactment of the law, the Inland Revenue Department will make a reassessment after the enactment. Taxpayers are not required to make any applications to the Department.

The proposed tax reduction will only be applicable to the final tax for the year of assessment 2025/26, but not to the provisional tax of the same year.  Therefore, taxpayers are still required to pay their provisional tax on time. The provisional tax paid will be applied to pay the final tax for the year of assessment 2025/26 and the provisional tax for the year of assessment 2026/27. Excess balance, if any, will be refunded.

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Adjustments relating to allowances

The Financial Secretary proposed to increase the following allowances commencing from the year of assessment 2026/27:

Year of Assessment Present
(2025/26)
$		 Proposed
(From 2026/27 onwards)
$
Basic Allowance 132,000 145,000
Married Person’s Allowance 264,000 290,000
Single Parent Allowance 132,000 145,000
Child Allowance (for each of the 1st to 9th child) 130,000 140,000
Additional Child Allowance (for each child) 130,000 140,000
Dependent Parent / Grandparent Allowance (for each dependant)     
  Parent / Grandparent aged 60 or above or is eligible to claim an allowance under the Government’s Disability Allowance Scheme 50,000 55,000
  Parent / Grandparent aged 55 or above but below 60 25,000 27,500
Additional Dependent Parent / Grandparent Allowance (for each dependant who is living with the taxpayer continuously throughout the year)    
  Parent / Grandparent aged 60 or above or is eligible to claim an allowance under the Government’s Disability Allowance Scheme 50,000 55,000
  Parent / Grandparent aged 55 or above but below 60 25,000 27,500

 

Adjustment relating to elderly residential care expenses

The Financial Secretary proposed to raise the deduction ceiling for elderly residential care expenses from $100,000 to $110,000 effective from the year of assessment 2026/27.

 

Extending the period of claiming additional child allowance for newborns from one year to two years

The Chief Executive proposed in his 2025 Policy Address to extend the period for claiming additional child allowance for newborns from one year to two years in order to promote fertility. Starting from the year of assessment 2026/27, a taxpayer may claim twice the allowance (i.e. $280,000, based on the proposed child allowance of $140,000) for each child in the first two years following childbirth. This measure is applicable to all children under the age of two by the end of the year of assessment (i.e. all children born on or after 1 April 2025).  Please refer to FAQ related to the proposal.

 

Implementation details of adjustments relating to allowances and elderly residential care expenses and extending the period for claiming additional child allowance for newborns

After enactment of the relevant legislation, the Inland Revenue Department will automatically apply the new amounts of allowances in calculating the 2026/27 provisional salaries tax.  Taxpayers are only required to complete their tax returns for the year of assessment 2025/26 and they do not need to make separate applications.  As for the raised deduction ceiling for elderly residential care expenses, please refer to FAQ 10 to 11 and Example 4 for the arrangement.

 

Increasing the stamp duty rate for residential property with value above $100 million

The Financial Secretary proposed to increase the stamp duty rate for residential property with value above $100 million from 4.25% to 6.5%.  The new rates apply to any instrument executed on or after 26 February 2026 for the sale and purchase or transfer of residential property.  Please refer to ad valorem stamp duty and the relevant FAQ for details.

 

Relaxing the criteria for stamp duty relief in respect of intra-group transfers

The Financial Secretary proposed to relax the criteria for stamp duty relief in respect of intra-group transfers under section 45 of the Stamp Duty Ordinance (Cap. 117) to expand the scope of eligible associated bodies corporate.  Please refer to Intra Group Relief for details.  The proposal applies to the instruments for sale and purchase or transfer instruments executed on or after 25 February 2026.

 

Providing stamp duty waiver for the transfer of non-residential properties into real estate investment trusts

The Financial Secretary proposed to provide stamp duty waiver in respect of acquisition of non-residential property for real estate investment trusts which seek to list in Hong Kong where specified conditions are met.

 

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