Hong Kong's Legislative Council has approved sweeping tax relief measures that will benefit over 2 million taxpayers and 170,000 businesses, reducing government revenue by more than HKD 11 billion through a combination of one-off rebates and permanent allowance increases. 

RF Report

The Hong Kong Legislative Council approved the Inland Revenue Amendment Bill 2026 on 13 May, introducing substantial tax concessions outlined in the 2025 Policy Address and 2026-27 Budget.

Beginning with the 2026-27 assessment year, the legislation raises various tax allowances and deduction limits. These adjustments cover basic personal allowances, married persons, single parents, and dependent children. The bill also increases allowances for supporting elderly parents and grandparents, alongside higher deduction caps for residential care expenses.

The government has extended the additional child allowance claim period for newborns. These permanent changes will reduce annual tax revenue by approximately HKD 5.51 billion while benefiting around 2.09 million taxpayers.

For the 2025-26 assessment year, taxpayers will receive a complete reduction of salaries tax, personal assessment tax, and profits tax, capped at HKD 3,000 per case. This temporary measure affects roughly 2.12 million individual taxpayers and 170,000 businesses.

Nearly a quarter of taxpayers and close to one-fifth of businesses will owe no tax for this assessment year. The one-off concession will cost the government approximately HKD 5.78 billion in revenue.

The above legislation, as passed, will be gazetted on 22 May 2026. The one-off tax concessions, increased allowances and deduction ceilings will be reflected in taxpayers’ final tax payable for the year of assessment 2025/26 and the tax payable for the year of assessment 2026/27, respectively.