Standard Rate Tax (Alternative Minimum Tax) Calculator
Estimate the Hong Kong standard-rate alternative minimum tax on net chargeable income, plus effective and marginal rates.
Input Data
Results
At a glance:Standard-rate tax = net chargeable income x standard rate. Hong Kong uses a two-tier standard rate (lower up to a threshold, higher above). Under Salaries Tax you pay the lower of the progressive-bracket tax or the standard-rate tax on net chargeable income, so the standard rate acts as an alternative minimum tax that caps liability for higher earners. Example: net chargeable income HK$2,000,000 at 15%/16% two-tier gives about HK$310,000, effective 15.5%, marginal 16%. WARNING: Standard-rate only — not the final payable; the actual tax is the lower of the two computations and still nets off allowances/deductions. Refer to the IRD.
Formula
Standard tax = min(net taxable income, threshold) × lower rate + max(0, net taxable income − threshold) × upper rate.
Effective rate = standard tax / net taxable income × 100%.
Marginal rate = upper rate if income > threshold, else lower rate.
Actual salaries tax = min(progressive-bracket tax, standard tax).
$$T_{std} = \min(I, 5{,}000{,}000)\times 15\% + \max(0,\, I-5{,}000{,}000)\times 16\%$$$$\text{Effective Rate} = \dfrac{T_{std}}{I}\times 100\%$$$$\text{Actual Tax} = \min(T_{progressive},\, T_{std})$$How to Use
- Enter the net chargeable income (after deductions and allowances).
- View the standard-rate tax, the effective rate and the marginal band rate.
- Compare with the progressive result to see which is lower; the lower applies.
FAQ
What is an alternative minimum tax (AMT)?
An AMT is a separate minimum tax that ensures high earners pay at least a floor rate even if deductions would otherwise lower their tax. In Hong Kong, the standard rate on net chargeable income serves this role: if the progressive-bracket tax exceeds the standard-rate amount, the standard rate applies and caps the bill.
What is the Hong Kong standard rate and the two-tier system?
The standard rate is applied to net chargeable income, with a two-tier structure: the portion within a threshold is taxed at the lower rate (e.g. 15%) and the portion above at the higher rate (e.g. 16%). The exact rates and threshold are set by the Government each year — check the latest IRD figures. The effective rate rises from the lower toward the higher rate as income grows.
Is this the final tax I pay?
No. This is the standard-rate computation only. Under Salaries Tax you pay the LOWER of (a) progressive-bracket tax or (b) standard-rate tax, both on net chargeable income. So the actual payable is the smaller of the two; the standard rate simply caps the liability for those who would otherwise pay more. Always net off allowances and deductions first.
What is the difference between effective and marginal rate?
Effective rate = total standard tax / net chargeable income (the average rate across all income). Marginal rate = the standard-rate band applying to the last dollar (the higher rate above the threshold). The effective rate is between the two tier rates; the marginal rate is the top band rate.
Does the standard rate apply to everyone?
It is an OPTION/comparison, not automatic for everyone. The Inland Revenue computes both the progressive and standard-rate results and charges the lower. Lower-to-middle earners usually pay less under progressive rates; higher earners tend to hit the standard rate cap. The calculator shows the standard-rate side so you can compare.
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References
This calculator's content is reviewed by our Licensed Tax Advisory team. Results are for reference only; please refer to the relevant authorities for the official figures.