Hong Kong Budget 2024-25: Personal Tax Changes
On 28 February 2024, the Hong Kong Financial Secretary announced the 2024-25 Budget. The latest financial plans focus on enhancing economic growth and development by stimulating investment, boosting consumer confidence, and strategic tax changes.
In this article, we will briefly review the latest personal tax changes that may affect you. If you are a business owner, don't miss out on our exclusive insights for SMEs and Foreign-Owned Companies.
The full announcement and resources can be found at budget.gov.hk.
New Tax for High-Income Individuals
Hong Kong has a progressive salaries tax structure — individuals pay between 2%–17% on their net chargeable income. You can calculate your salaries tax by subtracting deductions and allowances from your total income. Don’t hesitate to reach out to us if you have any questions.
Alternatively, your net income before deductions could be calculated at the 15% “Standard Rate” if this calculation method results in a lower tax payable than the progressive system.
The new change for the 2024/25 tax year is the addition of a 16% Standard Rate for income above HK$5,000,000. This system is known as the “Two-Tiered Standard Rate.”
| Net income (HKD) | Standard Rate (Salaries Tax) | Tax (HKD) |
|---|---|---|
| First $5,000,000 | 15% | $750,000 |
| Amount above $5,000,000 | 16% | $1,600 per $10,000 of net income |
Based on the table above, an individual with a net income of HK$20,000,000 would pay HK$750,000 for the first five million and an additional HK$2,400,000 in salaries tax, amounting to a total of HK$3,150,000.
With the previous single-tier Standard Rate system, the same individual would pay HK$3,000,000 in Salaries Tax instead.
This Change Bolsters Hong Kong’s Economy
The aim of this strategic change is to increase Hong Kong’s budget for 2024 and 2025 to meet the anticipated government spending needs.
The Hong Kong government expenditure will increase by 6.7%, amounting to HK$776.9 billion. 59.3% of the expenditure will go towards improving the livelihood of Hong Kong’s citizens, with a substantial focus on health, education, and social welfare.