Hong Kong Budget 2026/27: Tax Relief Measures and Support for Economic Growth
The Hong Kong government has confirmed a new package of tax relief measures under the 2026/27 Budget, with the objective of supporting households, easing the burden on businesses and reinforcing the territory’s long-term economic competitiveness. The measures were formally approved through the Inland Revenue (Amendment) (Tax Concessions, Concessionary Deductions and Allowances) Bill 2026, recently passed by the Legislative Council.
The Budget combines short-term tax concessions with broader policy initiatives aimed at encouraging innovation, investment and sustainable economic development. The government has described the package as part of a wider strategy to strengthen confidence in the local economy while maintaining Hong Kong’s position as an international financial and business centre.
Tax relief for individuals and families
A significant part of the Budget focuses on relief for individual taxpayers and families. Several allowances and deductions will be increased beginning from the year of assessment 2026/27.
The revised measures include higher:
- basic allowances;
- married person’s allowances;
- child allowances; and
- allowances for dependent parents and grandparents.
In addition, the deduction ceiling for elderly residential care expenses has been raised, reflecting the government’s intention to provide greater support for ageing households and long-term care costs.
The Budget also extends the period during which taxpayers may claim the additional child allowance for newborn children, offering families more flexibility in managing tax filings and benefit claims.
These measures are intended to address rising living costs and provide targeted support to middle-income households at a time of continued economic adjustment.
One-off tax concessions
Alongside the structural increases in allowances, the government has introduced one-off tax reductions for the year of assessment 2025/26.
The relief applies to:
- salaries tax;
- profits tax; and
- tax under personal assessment,
subject to a cap of HKD 3,000 per taxpayer.
The concession is expected to benefit both individuals and businesses, particularly small and medium-sized enterprises (SMEs), by reducing immediate tax liabilities and improving liquidity.
Although limited in size, the measure forms part of the government’s broader effort to stimulate domestic demand and support business activity in a challenging international economic environment.
Focus on innovation and strategic growth
Beyond direct tax relief, the 2026/27 Budget places considerable emphasis on long-term economic transformation. Authorities have reiterated their commitment to supporting:
- innovation and technology;
- the digital economy;
- strategic industries; and
- cross-border investment initiatives.
The government aims to strengthen Hong Kong’s attractiveness as a regional hub for finance, technology and international commerce through a combination of fiscal incentives and targeted public investment.
The Budget therefore reflects a dual approach: providing immediate relief to taxpayers while also promoting sectors considered essential for future economic growth and competitiveness.
Legislative approval and next steps
The Inland Revenue Amendment Bill was passed by the Legislative Council on 13 May 2026 and is expected to be officially gazetted on 22 May 2026.
Taxpayers and businesses operating in Hong Kong should review the updated concessions and allowances in order to evaluate their potential impact on tax planning, compliance obligations and future financial decisions.