(Policy Address 2025) HK to promote fertility with tax cuts and expanded reproductive technology

Chief Executive John Lee Ka-chiu announced multiple measures in his policy address on Wednesday (Sep 17) aimed at addressing the city's low fertility rate.

The city leader noted that the government will extend the claim period of the additional child allowance for newborns from one year to two years. 

Starting from the year of assessment 2026/27, a taxpayer may claim twice the allowance for each child in the first two years following childbirth. This measure applies to all children under the age of two by the end of the year of assessment.

Government sources indicated that parents of infants born after April 1 this year will benefit from the policy. It is estimated that the measure will reduce government tax revenue by about HK$300 million annually, benefiting up to 16,500 individuals.

The extended allowance will apply to all taxpayers in Hong Kong, including professionals who reside in the city through talent schemes. Their children will be eligible even if not born in Hong Kong, while the benefit can be claimed for up to the ninth child.

However, sources said that all child allowances within a single family must be claimed under either the father's or the mother's name for the given tax year. 

The current child allowance rules will apply in cases involving divorce, separation, or children with different parents. 

Lee emphasized that the number of newborns experienced an upward trend in 2023 and 2024, following a decrease for six consecutive years since 2017.

In 2024, there was a significant increase in the number of newborns, a year-on-year increase of about 3,500 babies, about 11 percent, adding up to 36,700 babies born in total.

Under the multi-pronged policy approach, fifteen new aided child care centers will be set up over the next three years to provide about 1,500 day care service places for children between birth and three years old, almost doubling the existing supply.

The government will enhance the School-based After School Care Service Scheme within this school year by removing the cap on the number of places to make it easier for parents to take up jobs.

The Council on Human Reproductive Technology has also made amendments to the legislation, removing the statutory storage periods of gametes and embryos for their own use. The amendments will take effect from this December. 

The Hospital Authority will also continue to increase the service quota for assisted reproductive services from 1,100 treatment cycles two years ago to 1,500 treatment cycles in 2025 to 26.

Other measures include setting up dedicated counters for pregnant women to facilitate their wait for medical services as well as foster a family-friendly culture. 

Meanwhile, Lee stated that the government has raised the tax deduction ceiling for home loan interest or domestic rents, introduced a new tax deduction for the medical expenses of assisted reproductive services, and increased the basic child allowance and additional child allowance in the year of birth.

The authorities have also launched the Families with Newborns Allocation Priority Scheme to shorten the waiting time by one year for Public Rental Housing (PRH) applicants with newborns. 

The Families with Newborns Flat Selection Priority Scheme was introduced, providing additional places for child care services; the After School Care Program for Pre-primary Children was extended to all 18 districts in Hong Kong; and a HK$20,000 Newborn Baby Bonus was introduced.

At the end of August, more than 5,300 PRH applications had their waiting time reduced by one year under the Families with Newborns Allocation Priority Scheme. 

In the recent HOS sale exercise with flat selection having concluded in August, over 800 families with newborns purchased their flats under the Families with Newborns Flat Selection Priority Scheme.