The Budget delivered on 25 Feb 2026 proposed several tax measures including a one-off tax reduction for 2025/26, increased allowances and deductions starting 2026/27, and changes to stamp duty rates for high-value properties.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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On 25 February 2026, the Financial Secretary introduced several tax measures within the 2026-27 Budget.
A one-off tax reduction of 100% is proposed for profits tax, salaries tax, and personal assessment tax for the year of assessment 2025/26. The reduction, subject to a ceiling of $3,000 per case, is expected to benefit approximately 2.12 million taxpayers subject to salaries tax and personal assessment, as well as 171,000 businesses. This measure will result in a reduction of government tax revenue by about $5.8 billion.
The tax reduction will only impact the final tax for the year of assessment 2025/26, with the provisional tax paid being applied to the final tax of 2025/26 and the provisional tax for 2026/27. Property tax is not affected, but eligible individuals with rental income can enjoy the reduction under personal assessment. Taxpayers separately chargeable to salaries tax and profits tax will benefit from tax reduction under both types.
Effective from the year of assessment 2026/27, the Budget proposes to increase several allowances, including basic allowances, married person's allowance, single parent allowance, child allowance, additional child allowance for newborns, and dependent parent/grandparent allowance. Additionally, the deduction ceiling for elderly residential care expenses will be raised.
The 2025 Policy Address proposed an extension of the claim period for additional child allowance for newborns from one year to two years, effective from the year of assessment 2026/27.
The ad valorem stamp-duty rates for residential property transactions valued above $100 million will be increased from 4.25% to 6.5%, effective from 26 February 2026. The new rates will apply to transactions executed on or after this date. The Inland Revenue Department will continue to charge the current rate of 4.25% until the proposal is passed by the Legislative Council, at which point purchasers or vendors must pay the difference within 30 days.
The criteria for stamp duty relief in respect of intra-group transfer of assets will be relaxed, expanding the scope of eligible associated body corporates, effective for instruments executed on or after 25 February 2026.
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