【2025 Tax Allowances】What are tax allowances? See personal allowances and 8 deduction methods

Facing the impact of the "green explosion", salaried employees who have to pay salaries tax will likely want to know how to effectively reduce their tax burden. This time, 10Life gives a detailed introduction to the 2024 personal allowances and eight major tax-deduction methods, helping you plan your taxes and save on them with ease.

To help employees reduce their tax burden, the Hong Kong Government provides various tax allowances. Eligible taxpayers can claim these allowances, which are deducted from assessable income through calculation, thereby lowering their tax burden. Every tax year, employees are entitled to the personal basic allowance, but if married and have claimed the married person’s allowance, they cannot also claim the personal basic allowance at the same time. In addition, allowances include additional amounts for different family or individual circumstances, such as the allowance for supporting parents and grandparents or maternal grandparents, child allowance, etc. (See the table below for details.)

Allowances | Overview of Personal Allowances

According to the Inland Revenue Department, the following are the allowances for the 2023/24 tax year (amounts in HKD):

Allowances | Personal Basic Allowance

According to the Hong Kong Inland Revenue Department, the personal basic allowance for the 2023/24 year is HK$132,000. Each taxpayer automatically receives this allowance without a special application. If married, you may consider applying for the married person’s allowance. However, note that if a taxpayer is married in the relevant year and has been granted the married person’s allowance, they cannot at the same time enjoy the personal basic allowance.

Allowances | Married Person's Allowance

The married person’s allowance for 2023/24 is HK$264,000. Couples can opt for joint assessment to combine both spouses’ incomes. If there is an income disparity between spouses, joint assessment allows more flexible allocation of allowances.

Allowances | Allowance for Supporting Parents and Grandparents / Maternal Grandparents

If a taxpayer supports elderly family members, they may apply for the allowance for supporting parents and grandparents / maternal grandparents. However, applicants should note the following eligibility requirements and details:

Eligibility

To apply for this allowance, the following conditions must be satisfied: 

1. Age requirements for the elderly 

• 60 or above: HK$50,000 per person 
• 55 to 59: HK$25,000 per person 
• Under 60: if eligible for the Government Disability Allowance, HK$50,000 per person 

2. Residence and support conditions 

To claim the allowance for supporting parents and grandparents / maternal grandparents, the elderly person must usually reside in Hong Kong during the tax year and meet one of the following conditions: first, the elderly person must live with the claimant for at least 6 months and not bear all the expenses; second, if the elderly person does not live with the claimant, the claimant or their spouse must pay at least HK$12,000 per year as maintenance.

Notes

The allowance for each parent/grandparent/maternal grandparent can only be claimed by one taxpayer and cannot be split, so siblings should agree in advance on who will claim; otherwise, if another person later files a claim, the Inland Revenue Department will not accept it. As long as the supported parent qualifies, the claimant may apply even if the parent is still working and has income, or has claimed the personal allowance. When filing, simply provide the relevant information on the tax return; supporting documents do not need to be submitted at that time, but it is recommended to retain related documents such as rent receipts, utility bills, and medical expenses for six years for possible inspection. In addition, if the elderly person receives Comprehensive Social Security Assistance (CSSA) or only occasionally stays at the claimant’s home for short visits, they will not meet the allowance conditions and the child cannot claim in those situations.

Allowances | Child Allowance

To help parents reduce their tax burden, the Inland Revenue Department provides a child allowance of HK$130,000 per child, and an additional HK$130,000 in the tax year in which the child is born. For example, if a child is born during the tax year, the parents can enjoy a total allowance of HK$260,000.

Eligibility

Parents may claim the child allowance for children who meet the following conditions, which include: 

1. The child is unmarried;  
2. Meets one of the following conditions:  
   • Under 18 years old;  
   • Aged 18 but under 25 and receiving full-time education, such as at a university or other recognized educational institution;  
   • Unable to work due to physical or mental incapacity.  

In addition to biological children, adopted children, stepchildren, or a spouse’s (including a former spouse’s) children are also eligible to be claimed.

Notes

The child allowance must be claimed by one of the spouses and cannot be divided. If there are multiple children, having the higher-earning spouse claim the allowance may more effectively reduce the tax burden. If parents are divorced or stepparents contribute to the child’s expenses, they should agree on the filing arrangement in advance; otherwise, the Inland Revenue Department will apportion the allowance according to the actual payment proportions. In addition, a child aged 18 to under 25 who participates in a Working Holiday or studies part-time (such as an apprenticeship program or short-term part-time courses) will not meet the full-time student requirement, and the parents will not be able to claim the allowance. Therefore, it is recommended to confirm the child’s education status in advance to avoid affecting the claim.

In addition to personal allowances, the Hong Kong Government also provides the following 8 tax deductions (amounts in Hong Kong dollars):

Deduction 1. Approved charitable donations

During the tax year, donations made to charities approved under section 88 of the Inland Revenue Ordinance, with each single donation of at least HK$100, are eligible for a tax deduction. The deduction can be up to 35% of assessable income. However, amounts paid for charity event tickets, movie tickets, donations placed into offering bags during Sunday worship, or proceeds from sales of goods at charity bazaars do not qualify for the deduction.

Deduction 2. Voluntary Health Insurance Scheme premiums 

One of the "three tax-saving items," the Voluntary Health Insurance (VHI) scheme is a government-promoted medical protection plan aimed at encouraging the public to purchase approved qualifying policies to enhance personal medical coverage while enjoying tax deductions. If the taxpayer or a cohabiting spouse is the policyholder, they can pay eligible VHI premiums for themselves or for nominated relatives and claim the deduction. The annual deduction limit per insured person is HK$8,000. Note that even if the actual premium paid exceeds HK$8,000, the deductible amount is capped at HK$8,000.

Deduction 3. Qualifying annuity premiums and tax-deductible MPF voluntary contributions 

The qualifying deferred annuity premiums and tax-deductible MPF voluntary contributions—also part of the "three tax-saving items"—not only help reduce tax but also prepare for retirement. A qualifying deferred annuity is a savings-type insurance where the policyholder pays premiums regularly and receives a steady income after retirement. Tax-deductible MPF voluntary contributions allow taxpayers to make additional voluntary contributions to their MPF accounts beyond mandatory contributions and enjoy tax benefits. From 1 April 2019, the combined annual deduction for both is capped at HK$60,000 against salaries tax or personal assessment. Note that withdrawals of tax-deductible MPF voluntary contributions can only be made upon reaching age 65 or meeting specified conditions.

Deduction 4. Self-education expenses 

Further education is another way to claim deductions. If a taxpayer takes work-related courses or sits for examinations and the courses are recognized by the government or designated organizations, they may apply for a deduction of up to HK$100,000.

General hobby classes or self-study courses usually do not qualify. Qualifying self-education courses mainly fall into three categories:  

• The first category is courses provided by education providers, such as universities, post-secondary colleges, and registered schools;  
• The second category includes training or development courses provided by industry associations, professional associations, or business associations, for example courses by the Hong Kong Association of Banks, the Institution of Mechanical Engineers, and the Hong Kong Professional Insurance Brokers Association;  
• The third category consists of courses recognized by institutions specified in Schedule 13 of the Inland Revenue Ordinance.

Note that if the tuition fees have been paid in whole or in part by an employer, the government (e.g., the Continuing Education Fund), or other organizations, only the actual amount paid by the taxpayer can be claimed. In addition, self-education expenses must be claimed in the tax year in which the payment was made.

Deduction 5. Contributions to MPF schemes or recognized occupational retirement schemes

Mandatory MPF contributions are deductible, with a maximum deduction of HK$18,000 per tax year.

Deduction 6. Home loan interest 

The Hong Kong Government offers a "home loan interest deduction" to help homeowners reduce their burden. If eligible, owners can claim a deduction for mortgage interest on owner-occupied property, up to HK$100,000 per year, and for up to 20 years. Applicants can choose the most suitable years to apply. Eligibility details can be found on the Hong Kong Government website.

Deduction 7. Elderly residential care expenses 

The Hong Kong Government also provides relief for taxpayers caring for elderly relatives. If the taxpayer or spouse pays for residential care expenses for parents, grandparents, or maternal grandparents aged 60 or above—such as accommodation, meals, or nursing fees—they can claim a tax deduction. The deduction limit is HK$100,000 per elderly person. Additionally, if an elderly person is under 60 but qualifies for the government's disability allowance, the same deduction applies. For more details, visit the Hong Kong Government official website.

Deduction 8. Residential rent 

From April 2022, tenants can also enjoy the "rent expense deduction." If eligible, a taxpayer may claim a deduction of up to HK$100,000 per tax year, with no time limit. For details, refer to the Inland Revenue Department information.

Tax allowances are fixed tax benefits provided by the government, such as the basic allowance and the married person’s allowance; if you meet the eligibility criteria you will receive them automatically without submitting additional documents. Tax-deductible items, however, must be claimed based on actual expenses — for example, medical insurance premiums or further education expenses — and you must keep the relevant receipts for verification.

You can make good use of the allowances and deduction methods mentioned above. For more details, please refer to the Inland Revenue Department.

If you omit or incorrectly report deductible items when filing your tax return, don’t worry too much. Taxpayers may apply to the Inland Revenue Department for corrections within six years of the relevant year of assessment, but be sure to keep all supporting documents.

The above-mentioned "Tax-saving Trio" can help you save on taxes. Combined, the three can provide taxpayers with up to HK$68,000 or more in tax deductions per year. Among them, the Qualified Deferred Annuity Policy (QDAP) not only offers an annual tax deduction of HK$60,000, but can also accumulate wealth to better secure your life after retirement. See how the Qualified Deferred Annuity Policy (QDAP) is taxed and the important considerations. Feel free to call or WhatsApp 37051599 to consult 10Life insurance advisors.

Further reading： 
[2025 Tax-deductible Annuity Complete Guide] Analysis of tax-deductible annuity products (10-year annuity term) — see how annuities save tax and which provider has higher returns!
[Tax-saving Tool] How soon can a tax-deductible annuity break even? How can you maximize tax deductions?
[Tax Payment Methods 2025] Paying taxes late can have big or small consequences — see the top 10 tax payment methods and tax payment precautions 
[Taxes 2025] How much tax on an annual salary of HK$1,000,000? What tax-saving methods are there? 
[Tax Guide] At what annual salary do you have to start paying tax? See the Hong Kong salaries tax calculation tutorial

Last updated: January 2, 2025

This English version of this article has been generated by machine translation powered by AI. It is provided solely for reference purposes. In the event of any discrepancy or inconsistency between this translation and the original Chinese version, the Chinese version shall prevail.