(Budget 2026) Chan sweetens relief package with double social security handouts, higher allowances

Financial Secretary Paul Chan Mo-po on Wednesday unveiled a package of relief measures in his 2026 Budget, including a salaries tax reduction of up to HK$3,000 and an extra month of payments for social security recipients.

After significant belt-tightening last year, Chan introduced what observers described as a modest “sweetener,” with the maximum salaries tax rebate increased to HK$3,000 — HK$1,500 more than last year and restoring it to the level seen two years ago.

To ease economic pressure on residents and businesses, the government will implement the following measures, taking into account the current fiscal position:

• Provide rates concessions for domestic properties for the first two quarters of 2026/27, capped at HK$500 per rateable property. The measure is expected to cover about 3.15 million domestic properties and reduce government revenue by approximately HK$3.1 billion.
• Provide similar rates concessions for non-domestic properties for the first two quarters of 2026/27, also capped at HK$500 per property. About 440,000 properties will benefit, with an estimated revenue impact of HK$400 million.
• Reduce salaries tax and tax under personal assessment for the year of assessment 2025/26 by 100 percent, subject to a ceiling of HK$3,000. The reduction will be reflected in the final tax payable for the year. About 2.12 million taxpayers are expected to benefit, reducing government revenue by roughly HK$5.3 billion.
• Reduce profits tax for the year of assessment 2025/26 by 100 percent, capped at HK$3,000. Approximately 171,000 businesses will benefit, with an estimated revenue reduction of HK$500 million.
• Provide an additional allowance equal to one month of the standard CSSA payment, Old Age Allowance, Old Age Living Allowance or Disability Allowance. Similar arrangements will apply to recipients of the Working Family Allowance. The measure will involve additional expenditure of about HK$6.5 billion. Compared with last year’s half-month payment, recipients will receive a full extra month this time.

In addition, starting from the year of assessment 2026/27, several tax allowances will be increased:

• The basic allowance and single parent allowance will rise from HK$132,000 to HK$145,000, while the married person’s allowance will increase from HK$264,000 to HK$290,000. Around 2.09 million taxpayers will benefit, with annual revenue reduced by approximately HK$3.56 billion.
• The child allowance and additional child allowance will increase from HK$130,000 to HK$140,000, benefiting about 360,000 taxpayers and lowering revenue by roughly HK$680 million per year.
• Allowances for maintaining dependent parents or grandparents and deductions for elderly residential care expenses will be enhanced. The allowance for dependents aged 60 or above will increase from HK$50,000 to HK$55,000, while that for dependents aged 55 to 59 will rise from HK$25,000 to HK$27,500. The deduction ceiling for elderly residential care expenses will increase from HK$100,000 to HK$110,000. These measures are expected to benefit around 830,000 taxpayers and reduce revenue by about HK$970 million annually.