Methodology - Hong Kong (2026)

Educational model for the 2025/26 year of assessment - not an IRD assessment, not a tax return, not tax advice.

Employee (Salaries Tax)

Salaries Tax is the lower of two computations: progressive rates on net chargeable income, or the standard rate on net total income (income after deductions but before allowances).
Progressive rates 2025/26: 2% on the first HKD 50,000, 6% on the next 50,000, 10% on the next 50,000, 14% on the next 50,000 and 17% on the remainder.
Standard rate (two-tier): 15% on the first HKD 5,000,000 of net total income and 16% on the part above 5,000,000.
Allowances: basic personal allowance HKD 132,000, or HKD 264,000 for a married person's allowance. Allowances reduce net chargeable income under the progressive computation only; they do not apply to the standard-rate computation.
Mandatory Provident Fund (MPF): the employee contributes 5% of monthly relevant income, applied between the lower level of HKD 7,100 and the upper level of HKD 30,000 a month (so a maximum of HKD 1,500 a month). The annual deductible amount for Salaries Tax is capped at HKD 18,000.
One-off relief: the 2025/26 Salaries Tax reduction is 100% of the final tax, capped at HKD 3,000, and is applied after the tax is computed.
Employer cost: the employer also contributes 5% of monthly relevant income to MPF, on the same HKD 7,100 to 30,000 band (maximum HKD 1,500 a month).
Out of scope: dependent, child, single-parent and disability allowances, approved charitable donations, home loan interest, elderly residential care and other concessionary deductions, the personal assessment election, and provisional Salaries Tax timing.

An unincorporated business (sole proprietorship) pays Profits Tax on its assessable profits = revenue - deductible expenses.
Two-tier Profits Tax rates for unincorporated businesses 2025/26: 7.5% on the first HKD 2,000,000 of assessable profits and 15% on the part above 2,000,000.
The 2025/26 Profits Tax reduction is 100% of the final tax, capped at HKD 3,000, applied after the tax is computed.
A sole proprietor can join MPF as a self-employed person (5% of relevant income within the same HKD 7,100 to 30,000 monthly band). This calculator surfaces MPF only when it is part of the input.
Out of scope: depreciation allowances, trading losses carried forward, the personal assessment election (which can be more favourable at lower profit levels), provisional Profits Tax timing, and the business registration fee.