Statutory and legislative payroll changes in Hong Kong, each linked to the page it was checked against. For information only, not legal or tax advice: confirm details with the source before acting. See the terms.
Salaries tax allowances raised from year of assessment 2026/27
Effective YA 2026/27
The 2026-27 Budget raises salaries tax allowances from the year of assessment 2026/27 onwards: basic allowance to HK$145,000, married person's allowance to HK$290,000, and child allowance (1st to 9th child) to HK$140,000 per child.
For the employer
- No payroll withholding action - Hong Kong salaries tax is assessed by the Inland Revenue Department rather than withheld by employers.
For the employee
- Higher basic, married person's and child allowances reduce salaries tax from YA 2026/27.
A separate one-off 100% salaries tax reduction, capped at HK$3,000 per case, applies to YA 2025/26.
Source: Inland Revenue Department, Hong Kong - 2026-27 Budget Tax Measures · Last verified 1 October 2026
Statutory minimum wage rises to HK$43.1 an hour
Effective 1 May 2026
The Statutory Minimum Wage (SMW) rate is raised to HK$43.1 per hour with effect from 1 May 2026, under the Government's new annual review mechanism, which uses a formula to review the SMW rate. The monthly monetary cap on the requirement to record employees' total hours worked rises in tandem to HK$17,600.
For the employer
- Pay all covered employees at least HK$43.1 per hour from 1 May 2026.
- Record total hours worked for employees earning below HK$17,600 per month.
For the employee
- Covered employees are entitled to at least HK$43.1 per hour from 1 May 2026.
Source: Labour Department, Hong Kong - Statutory Minimum Wage · Last verified 1 October 2026
Abolition of MPF offsetting against severance and long service payments
Effective 1 May 2025
From the transition date of 1 May 2025, employers can no longer use accrued benefits from their mandatory MPF contributions to offset severance payments (SP) or long service payments (LSP) attributable to service on or after that date. A grandfathering arrangement applies to employees employed before the transition date.
For the employer
- For employment from 1 May 2025 onward (post-transition portion), pay SP/LSP in full without offsetting MPF accrued benefits.
- For employees employed before 1 May 2025, split SP/LSP into a pre-transition portion (based on wages and service at 1 May 2025) and a post-transition portion.
- Accrued benefits from employer MPF contributions may still offset the pre-transition portion, but not the post-transition portion.
For the employee
- SP/LSP attributable to service from 1 May 2025 can no longer be reduced by the employer's MPF contributions.
In practice: An employee hired in 2015 and dismissed in 2027: the pre-transition portion (service to 1 May 2025) may be offset by accrued benefits from employer MPF contributions; the post-transition portion (service from 1 May 2025) must be paid in full.
The HK$390,000 combined cap on SP/LSP continues to apply; any excess is deducted from the post-transition portion.
Source: Labour Department, Hong Kong - Abolition of MPF offsetting arrangement · Last verified 1 October 2026