Hong Kong taxes for US expats: income tax, rates, and filing guide
Hong Kong's low-tax reputation is real, but for US citizens and green card holders, it comes with a second set of obligations most other expats never face. Hong Kong taxes apply only to income sourced within Hong Kong.
The IRS taxes your worldwide income regardless of where you live, and there is no bilateral tax treaty between the two countries.
This article is brought to you by Taxes for Expats (TFX) – a top-rated tax firm serving US citizens, residents, and anyone with US tax obligations. Planning a move to Hong Kong, or already filing from there? Schedule your free discovery call, and we'll walk you through the next steps.
Quick answers before you scroll:
- Hong Kong uses a territorial tax system: only income arising in or derived from Hong Kong is taxable there.
- Salaries tax is generally calculated using either the progressive rates (2%–17%) or the two-tier standard rate (15% on the first HK$5 million of net income before personal allowances and 16% above that), whichever produces the lower tax.
- Hong Kong does not tax capital gains, dividends, or interest for individuals. No VAT, no GST.
- US citizens and green card holders continue to file US returns on worldwide income.
- There is no US–Hong Kong tax treaty. Hong Kong is not listed among the US income tax treaty jurisdictions.
At a glance
| Item | Detail |
|---|---|
| Tax authority | Inland Revenue Department (IRD) |
| Tax year | April 1 – March 31 |
| Main taxes | Salaries tax, profits tax, property tax |
| Filing cadence | Annual; typically due 1 month after IRD issues return |
| Salaries tax rates (2025/26) | 2%–17% progressive; 15%–16% two-tiered standard |
| Profits tax (corporate) | 8.25% first HK$2M; 16.5% above |
| Property tax | 15% on net assessable rental value |
| Social security | MPF – 5% employer + 5% employee |
| Tax treaty with the US | None |
Hong Kong taxation
Income tax in Hong Kong applies only to income sourced within its borders.
There is no worldwide tax on individuals, no VAT or GST, no capital gains tax, and no withholding tax on dividends or interest for individual investors. The system rests on three separate taxes, each applied to a specific category of income.
| Tax | Who it applies to | Income base | Rate | US expat relevance |
|---|---|---|---|---|
| Salaries tax | Employees, directors | HK employment income | 2%–17% or 15%–16% (lower applies) | Primary tax for employed expats |
| Profits tax | Businesses | HK-sourced profits | 8.25% / 16.5% corp; 7.5% / 15% unincorp | Applies to self-employed and HK companies |
| Property tax | HK property owners | Net rental value | 15% | Applies if you rent out HK property |
Foreign-sourced income is generally outside Hong Kong tax for individuals. For multinational entities, certain foreign-sourced passive income can fall under the Foreign-Sourced Income Exemption (FSIE) regime – that is a business rule, not an individual one.
Tax in Hong Kong stops at the HK border. IRS filing continues on worldwide income, and US citizens and resident aliens abroad file the same federal returns as those living in the US.
Also read: UK vs US taxes
Territorial taxation in Hong Kong (foreign/overseas income)
Hong Kong does not tax foreign income for individuals. Tax applies based on the source of the income, not where you live.
If you work remotely from Hong Kong, your Hong Kong salaries tax position depends on Hong Kong's employment source rules and the facts of your employment. In many cases, services performed in Hong Kong are taxable there, but the analysis is not based solely on where you are physically located.
Source is determined by where the income-generating activity takes place – not by where the payer is located or where money is deposited.
For business profits, source generally depends on where the profit-generating operations take place.
For employment income, Hong Kong applies statutory and case-law source rules; where services are performed is important, but the payer's location or bank account location does not decide the issue by itself.
A simple source check:
- Was the income earned for services performed in Hong Kong? If yes, generally taxable. If no, generally outside HK tax.
- Is the income passive – dividends, interest, capital gains? Generally not taxable in Hong Kong for individuals. Still reportable to the IRS.
- Is it business profit? Look at where operations occurred, not where the client sits.
Three scenarios for a US expat living in Hong Kong:
- Salary from a Hong Kong employer for work performed in Hong Kong: taxable in HK, reportable on US return.
- Remote work performed from Hong Kong for a US employer may be taxable in Hong Kong, depending on the facts and Hong Kong's employment source rules. Services performed in Hong Kong will often result in Hong Kong tax exposure.
- Dividends and interest from a US brokerage: not taxable in HK, fully reportable to the IRS.
Hong Kong tax on overseas income for individuals is effectively nil. This does not remove your US filing obligation. Foreign earned income from Hong Kong may still qualify for the Foreign Earned Income Exclusion on the US side.
NOTE! The FSIE regime applies to in-scope corporate entities, not to individual employees.
Who qualifies as a tax resident in Hong Kong?
Hong Kong generally taxes employment income based on its source rather than tax residency. A non-resident earning HK-sourced income is generally taxable in Hong Kong. A resident earning only foreign-sourced income generally is not.
The following residence concepts are used for specific statutory purposes – such as Certificates of Resident Status, tax treaties (where applicable), and AEOI/CRS – rather than as a general test for salaries tax liability:
- You ordinarily reside in Hong Kong.
- You spend more than 180 days in a single year of assessment.
- You spend more than 300 days across two consecutive years, with one being the relevant year.
These day-count tests mainly apply to AEOI (automatic exchange of information) and Certificate of Resident Status purposes. Residency also unlocks the election for personal assessment, which lets residents combine income and losses across employment, business, and rental into a single calculation.
The 60-day rule. Some employees qualify for a salaries tax exemption if visits to Hong Kong total no more than 60 days in the basis period and all statutory conditions are met.
Hong Kong residency and US tax residency are separate questions. The IRS applies citizenship, green card status, and the tests for determining an individual's tax residency status. The two classifications often do not align – dual-status returns are common in the year someone moves in or out of Hong Kong.
If you plan to claim FEIE, the Bona Fide Residence Test is a separate US question – different criteria, different time periods.
Hong Kong tax for expats (what changes vs. residents)
The income tax in Hong Kong for expats works the same way as it does for locals.
Same rates, same allowances, same source rules. The tax system does not create a separate category for Hong Kong tax for foreigners.
What changes is the fact pattern – employer-provided housing, part-year arrivals, remote work for foreign employers, income earned before or after the assignment.
Practical checklist for new arrivals:
- Source of income. Did you perform the services in Hong Kong? If yes, generally taxable in HK regardless of who paid you.
- Employer-provided housing. If your employer provides accommodation directly, the taxable value is generally calculated under Hong Kong's rental value rules – often 10% of employment income after deductions, though the rate can vary by accommodation type. In a city where a flat can rent for HK$30,000 to HK$50,000 per month, this materially reduces the taxable benefit.
- Part-year arrivals and departures. You are taxed on HK-sourced income earned during the period you performed services in Hong Kong.
- Common misunderstanding. Living in Hong Kong does not automatically make all your income taxable there. Non-HK-sourced income stays outside the HK tax net – but remains fully reportable to the IRS.
Worked example. A US software engineer moves to Hong Kong in September and takes a local job.
- Her HK salary from September onward: subject to salaries tax.
- Her US brokerage dividends earned all year: not taxable in HK, reported on US Form 1040.
- Her freelance consulting income from a US client, done at her laptop in Hong Kong: generally HK-sourced, because that is where the services were performed.
For readers relocating, our moving abroad guide covers the state-side filing questions in the year of the move. For those on employer assignments, see our overview of foreign assignments and US expat taxes.
Hong Kong taxes for expats follow simple rules, but the situations that trigger them are rarely simple.
Hong Kong income (salaries) tax rates
The Hong Kong tax rate on employment income is generally calculated using either progressive rates (2%–17%) or the two-tier standard rate (15% on the first HK$5 million of net income before personal allowances and 16% above that). The IRD applies whichever method produces the lower bill.
For most expats below the top earner brackets, the progressive method wins.
Progressive rates (2025/26)
| Net chargeable income (HK$) | Tax rate |
|---|---|
| First 50,000 | 2% |
| Next 50,000 | 6% |
| Next 50,000 | 10% |
| Next 50,000 | 14% |
| Remainder | 17% |
Two-tiered standard rates (2025/26)
| Net income before personal allowances (HK$) | Tax rate |
|---|---|
| First 5,000,000 | 15% |
| Above 5,000,000 | 16% |
The Hong Kong tax brackets in the progressive schedule apply only after personal allowances are subtracted. Most expats pay meaningfully less than the headline 17%.
The break-even point between methods depends on allowances and filing status. For 2025/26, a single taxpayer approaches the standard-rate zone around HK$2.02 million of annual income; for married taxpayers, closer to HK$3.14 million.
Worked example. A single US expat earns HK$800,000 in 2025/26 with the basic allowance of HK$132,000.
- Net chargeable income: HK$668,000
- 2% on first HK$50,000 = HK$1,000
- 6% on next HK$50,000 = HK$3,000
- 10% on next HK$50,000 = HK$5,000
- 14% on next HK$50,000 = HK$7,000
- 17% on remaining HK$468,000 = HK$79,560
- Total salaries tax: approximately HK$95,560 (effective rate near 12% on gross)
Personal allowances for 2025/26
Personal allowances reduce your net chargeable income before progressive rates apply. For most expats, the basic allowance alone removes the first tax tier entirely.
| Allowance (2025/26) | Amount (HK$) | Who claims it |
|---|---|---|
| Basic allowance | 132,000 | Every taxpayer |
| Married person's allowance | 264,000 | Married couples electing joint assessment |
| Child allowance | 120,000 per child | Per qualifying child |
| One-off tax reduction | Up to 3,000 | For the 2025/26 year of assessment, Hong Kong provides a one-off 100% reduction of salaries tax and tax under personal assessment, capped at HK$3,000 per case |
What matters most:
- Married couples benefit from joint assessment when one spouse earns significantly more.
- The child allowance stacks per child.
- The one-off reduction is a cap on tax owed, not on income.
For tax year 2026/27, the basic allowance is HK$145,000, the married person's allowance is HK$290,000, and the child allowance is HK$140,000 per qualifying child. These figures apply to tax year 2026/27, not tax year 2025/26.
US side reminder. If you claim the Foreign Earned Income Exclusion, it may reduce or eliminate eligibility for the refundable Additional Child Tax Credit, depending on your circumstances – our Child Tax Credit for expats guide explains that interaction. FEIE itself is claimed on Form 2555, attached to Form 1040.
Which income types are taxable in Hong Kong?
Hong Kong taxes employment income, business profits, and rental income from Hong Kong property. Several income types that are taxable in the US are effectively tax-free in Hong Kong – capital gains, dividends, and interest for individuals.
| Income type | Taxable in HK? | Treatment |
|---|---|---|
| Salary, wages, bonuses (HK-sourced) | Yes | Salaries tax |
| Benefits in kind | Yes | Included in salaries tax |
| Employer-provided housing | Yes | Notional value: 10% of net income after deductions |
| Directors' fees | Generally, yes, subject to Hong Kong's statutory sourcing rules | Salaries tax |
| Stock options | Yes, based on portion attributable to HK employment | May include gains realized after departure |
| Self-employment / business profits (HK-sourced) | Yes | Profits tax |
| Rental income (HK property) | Yes | Property tax, 15% |
| Interest (individual) | No | Not taxed |
| Dividends (individual) | No | Not taxed |
| Capital gains (individual) | No | Not taxed |
| Pensions from HK employment | Generally yes | Salaries tax |
| Foreign-sourced passive income (individual) | No | Not taxed |
For US reporting on foreign rentals, our foreign rental income tax guide walks through Schedule E and the depreciation rules that catch most expats off guard.
Other types of tax in Hong Kong
Beyond salaries tax, Hong Kong levies property tax and stamp duty, plus a few narrower taxes. There is no capital gains tax, no VAT or GST, and no estate duty (abolished in 2006).
| Tax | Rate | Who pays |
|---|---|---|
| Property tax | 15% on net rental value | HK property owners receiving rent |
| Stamp duty | Ad valorem on transfers | Mostly the buyer |
| Betting duty | Applied to gambling operators | Betting operators |
| Hotel accommodation tax | 3% of the accommodation charge for taxable hotel accommodation, effective January 1, 2025, under current legislation | Hotels administer the tax; cost is commonly reflected in guests' charges |
The Hong Kong property tax rate of 15% applies only to net rental income from HK properties. Not to the property value. Not to gain on sale. Owner-occupied property is not subject to property tax at all.
If you rent your Hong Kong home to tenants, the assessable value is rental income minus a 20% statutory allowance for repairs and outgoings.
US reporting on property
Rental income from any foreign property – including Hong Kong – is fully reportable to the IRS on Schedule E. Qualifying foreign income taxes paid may be eligible for a Foreign Tax Credit on Form 1116, subject to the IRC §901 rules and other FTC limitations. Directly held foreign real estate is not itself reportable on FBAR or Form 8938, though the rental income and bank accounts holding proceeds usually are.
For the reporting mechanics, see our foreign property tax guide. For gains on eventual sale, our capital gains tax on UK property guide offers a useful parallel treatment.
Taxes for businesses in Hong Kong
Hong Kong profits tax applies only to profits arising in or derived from Hong Kong – the same territorial principle that governs individual salaries tax.
| Entity type | First HK$2M | Above HK$2M |
|---|---|---|
| Corporation | 8.25% | 16.5% |
| Unincorporated business | 7.5% | 15% |
Only one entity per corporate group can claim the lower tier.
Offshore vs. onshore profits. Because profits tax is source-based, businesses can argue that certain profits are earned outside Hong Kong and therefore not taxable. Offshore treatment requires documentation showing the profit-generating activity happened outside Hong Kong – not just that a client, bank, or invoice sits abroad.
Records to keep:
- Contracts showing where services were performed
- Travel records for staff performing the work
- Correspondence with clients and suppliers
- Board minutes documenting where management decisions were made
- Operational evidence (warehouses, servers, staffing locations)
Sector incentives apply to R&D, IP acquisition, financial services, shipping, and e-commerce. As a free port, Hong Kong charges no tariffs on imports or exports.
US side for business owners
A US citizen who owns or operates a Hong Kong business may have additional US reporting obligations, including Form 5471, if the ownership rules are met. Whether the US self-employment tax applies depends on the business structure and how the individual is compensated. FEIE alone does not eliminate self-employment tax. Structure and timing matter here more than in a salary-only situation.
Hong Kong social security & MPF
The Mandatory Provident Fund (MPF) is Hong Kong's retirement savings system. Most employees and their employers must contribute 5% each.
MPF at a glance:
- Contribution rate: 5% from the employer and 5% from the employee.
- Monthly relevant income cap: HK$30,000.
- Maximum monthly contribution per party: HK$1,500.
- Annual employee deduction on the HK return: up to HK$18,000.
- Exemptions: short-term expats on contracts under 13 months, and employees covered by an overseas retirement scheme, may be exempt.
US treatment of MPF is not straightforward.
Employee MPF contributions are retirement plan contributions, not foreign income taxes. They do not qualify for the Foreign Tax Credit under IRC §901 – treating them as if they did is a common error on self-prepared returns. The Foreign Tax Credit applies to qualifying foreign income taxes, not to social security or retirement contributions.
Whether MPF earnings are currently taxable to a US person, and how the account is reported on Form 8938 and FBAR, depends on facts we would want to walk through case by case.
Because there is no US–Hong Kong totalization agreement, Hong Kong MPF contributions do not coordinate with US Social Security the way German or UK contributions do.
Our Social Security for expats overview explains totalization mechanics, and our guide to US retirement accounts for Americans abroad covers the mirror question about your 401(k) or IRA while in Hong Kong.
How to file and pay taxes in Hong Kong
Hong Kong filing follows a straightforward annual cycle. The trickier part for new expats is not the filing itself – it is the provisional tax bill that arrives with the first assessment.
The four steps:
- Register with the IRD. Most employees do not separately register when starting work because employers report new hires to the IRD. If you become chargeable to Hong Kong tax and do not receive a tax return, you must notify the IRD in accordance with its filing rules.
- Receive and complete the return (BIR60). Individual returns are typically issued in May, due within 1 month. Voluntary e-filing via eTAX grants an automatic 1-month extension.
- File and pay via eTAX. Register at the IRD's eTAX portal to file, check status, and pay by bank transfer, ATM, or credit card.
- Budget for provisional tax. The IRD bases provisional salaries tax on the preceding year's income. Your first assessment usually includes both the final tax for the year just ended and provisional tax for the year ahead – a "double bill" that surprises many expats.
Documents to have ready:
- Employment contract and any variation letters
- Full breakdown of pay, bonuses, and benefits (including housing)
- MPF contribution records
- Days spent inside and outside Hong Kong
- Prior-year assessment notice, if any
- Rental agreements, if you own or rent HK property
The IRD updates deadlines and filing requirements annually. The eTAX portal is the authoritative source for the current year.
Deadlines and penalties for late filing
Hong Kong and US deadlines run on different calendars. Missing one does not extend the other.
| Item | Deadline / rate | Consequence |
|---|---|---|
| HK return (paper) | ~1 month after IRD issues it | Fine up to HK$10,000 + additional fine equal to tax undercharged |
| HK return (voluntary eTAX) | Auto 1-month extension | Same penalties if extended date missed |
| HK late payment | 5% surcharge after due date | Additional 10% if unpaid after 6 months |
| US federal return (2025 tax year) | April 15, 2026; auto to June 15 for expats abroad | Interest on unpaid tax accrues from April 15 |
| US extension to October 15 | Requires Form 4868 filed by June 15 | Filing extension only, not payment |
If you are already behind:
- HK side: contact the IRD as soon as possible. Voluntary contact is treated more favorably than being contacted first.
- US side: if you missed multiple years and the failure was non-willful, the Streamlined Filing Compliance Procedures often allow catch-up with reduced or no penalties.
If you owe US tax but can't pay right away, you have options – see our guide on what to do if you can't pay tax on time. You can also file for a tax extension or pay the IRS directly online.
Leaving Hong Kong permanently. Departure tax clearance may be required. In many cases, your employer must notify the IRD at least one month before your departure (Form IR56G), and final payments may be withheld until the IRD issues tax clearance. Departure without clearance can complicate future visa and banking matters.
Most popular US tax forms for expats in Hong Kong
US tax in Hong Kong requires several IRS forms beyond the basic return. Which apply depends on your income, assets, and account balances – not your visa status.
| Use case | Form | When it applies |
|---|---|---|
| Standard return | Form 1040 | If worldwide income meets the filing threshold for your filing status |
| Foreign earned income exclusion | Form 2555 | May exclude up to $130,000 (2025) / $132,900 (2026) of qualifying foreign earned income, provided you meet the tax home requirement and either the bona fide residence or physical presence test |
| Foreign tax credit | Form 1116 | Credits qualifying foreign income taxes against US tax on foreign-source income |
| FBAR | FinCEN 114 | If combined foreign accounts exceeded $10,000 on any day during the year |
| FATCA | Form 8938 | If foreign assets exceeded $200,000 year-end / $300,000 at any time (single, abroad); $400,000 / $600,000 (MFJ, abroad) |
| PFIC reporting | Form 8621 | For most non-US mutual funds and pooled investment products |
Correction to a common assumption: Form 1040 is not required for every US citizen abroad regardless of income. It is required when worldwide income meets the filing threshold for your filing status – the same rule that applies to US-based filers.
PFIC caution
Many Hong Kong-domiciled investment funds and pooled products may be classified as PFICs, which can trigger complex reporting requirements and unfavorable US tax treatment if not properly reported and elections are not made when available. Flag any foreign fund holdings with your CPA before year-end – the elections that make PFIC treatment manageable have timing requirements.
Double tax relief and US–Hong Kong tax treaty
There is no Hong Kong–US tax treaty. The US and Hong Kong have never signed a bilateral income tax agreement.
Practically, that means no treaty-reduced withholding rates, no tie-breaker residency rules, and no mutual agreement procedure to resolve disputes between the two authorities. The absence of a US–HK tax treaty is a real gap, but two IRS mechanisms still reduce or eliminate most double taxation.
FEIE vs. FTC comparison
| Foreign Earned Income Exclusion (FEIE) | Foreign Tax Credit (FTC) | |
|---|---|---|
| What it does | Excludes foreign earned income from US taxable income | Credits foreign income taxes against US tax on the same income |
| 2025 limit | $130,000 | Limited to US tax on foreign-source income |
| 2026 limit | $132,900 | Same limitation |
| Income types covered | Earned income only (wages, self-employment) | Applies broadly, including passive income |
| Qualification | Bona Fide Residence Test or Physical Presence Test + tax home abroad | Foreign taxes paid |
| Best for | Often favored in low-tax jurisdictions like HK, but depends on individual facts | Expats in high-tax jurisdictions or with passive income |
You cannot claim the FTC on income already excluded under FEIE. Because Hong Kong rates are generally lower than US rates, the FTC alone often does not eliminate the full US liability.
Hong Kong's low rates often make FEIE attractive for salaried expats, though the right choice varies by situation. FTC becomes relevant for income above the FEIE cap, for passive income, and for business profits.
A realistic expectation. Whether you end up owing US tax depends on your income level, income type, filing status, and whether you have self-employment income (which FEIE does not shield from self-employment tax). Most salaried expats in Hong Kong reduce US federal income tax significantly, but the outcome is not universally zero.
For the choice between the two mechanisms, see our FTC vs. FEIE comparison. For the broader treaty landscape, our US tax treaties guide covers how treaties work in countries that have them.
Need help with US taxes in Hong Kong? Get expert advice
Managing foreign income, credits, and dual deadlines across two systems is where most expats need real support. TFX has prepared US returns for Americans in Hong Kong for over 20 years.
Where we help most:
- Late filings and Streamlined Procedure eligibility for non-willful missed returns
- Foreign asset reporting – FBAR, Form 8938, and PFIC holdings from HK-domiciled funds
- Cross-border income structuring – employment, self-employment, rental, investment
FAQ
Any foreigner earning HK-sourced income is subject to salaries or profits tax, regardless of residency status. The Hong Kong tax rate for foreigners is identical to the rate locals pay – there is no separate rate for non-nationals. A narrow 60-day exemption applies if your visits to Hong Kong total no more than 60 days in the basis period and all statutory conditions are met.
No. The US and Hong Kong have not signed a bilateral income tax treaty. US expats rely on FEIE and FTC to avoid double taxation. Reporting obligations like FBAR and Form 8938 exist independently of treaty status – Form 8938 applies whenever the threshold is met, treaty or no treaty.
The HK income tax rate on employment income is generally calculated using either the progressive rate (2%–17%) or the two-tier standard rate (15% on the first HK$5 million of net income before personal allowances and 16% above that), whichever produces the lower bill.
Hong Kong taxable income starts with gross HK-sourced employment income – salary, bonuses, benefits in kind, and the notional value of employer-provided housing. From that base, you subtract allowable deductions (MPF contributions, approved charitable donations) and personal allowances to reach net chargeable income, which is what the progressive rates apply to. Passive income – dividends, interest, capital gains – is not part of taxable income for individuals in Hong Kong, though it remains reportable to the IRS.
The main taxes for expats in Hong Kong are salaries tax on employment income, profits tax on business profits, and property tax on rental income from HK real estate. There is no capital gains tax, no VAT or GST, and no withholding on dividends or interest for individuals. Beyond those, most expats never encounter another HK tax in their day-to-day filing.
The same progressive and standard rates apply to expats and locals. There is no separate foreigner rate. The income tax rate in HK for a moderate expat salary typically sits well below the 17% headline once basic and child allowances are applied.
Legally, yes – the income tax in Hong Kong applies to HK-sourced income, and the US taxes worldwide income. In practice, the FEIE ($130,000 for 2025, $132,900 for 2026) and Foreign Tax Credit reduce the US liability significantly for most expats. The final result depends on income type and level.
Hong Kong is more accurately a low-tax jurisdiction than a classic tax haven. Rates are low and the territorial system is favorable. But the FSIE regime now taxes certain foreign-sourced passive income for in-scope multinational businesses, moving Hong Kong further from the tax-haven category.
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