Policy Address 2025: HK$260,000 tax allowance for parents extended to 2 years per newborn

The double tax allowance for parents with newborns is to be extended from one to two years, Chief Executive John Lee has announced as part of the city’s effort to boost the fertility rate.

Taxpayers in Hong Kong currently receive a HK$130,000 tax allowance for every child. However, the amount is doubled during the year of the child’s birth, meaning they receive an allowance of HK$260,000 in the first year.

See also: Hongkongers who do not want children cite education system, politics, living space as main reasons, survey finds

In his 2025 Policy Address speech on Wednesday, Lee said the claim period for the doubled tax allowance will be extended to two years, starting in the 2026/27 assessment period. The measure will be applicable to all children aged under two by the end of the year of assessment.

Like many developed societies, Hong Kong has been struggling with a low fertility rate in recent years. Lee said on Wednesday that the number of newborn babies in Hong Kong had decreased for six consecutive years since 2017. The number showed an upward trend in 2023 and last year, with 36,700 newborns recorded in 2024 – an 11 per cent year-on-year increase.

Raft of measures

Lee cited his previous initiatives and said his administration had differed from previous ones, which adopted a “non-interventionist approach” to fertility issues. He said the current government had raised the tax deduction ceiling for home loan interest or domestic rents, introduced a tax deduction for the medical expenses of assisted reproductive services, and increased the basic child allowance on top of the doubled tax allowance.

A priority scheme was also implemented to shorten the waiting times for families with newborns who were queuing for public housing. Lee said that, as of the end of August, more than 5,300 applicants saw their waiting time reduced by one year. As of last month, the average waiting time for general applicants stood at 5.4 years.

A separate policy allows families with a newborn to have priority in choosing subsidised housing. According to Lee, during the most recent Home Ownership Scheme sale exercise, under which flat selection took place last month, more than 800 families with newborns were able to purchase apartments under the priority scheme.

In 2023, Lee’s administration introduced a one-off HK$20,000 allowance for each child to families where at least one parent is a Hong Kong permanent resident. It applied to parents whose babies are born between October 2023 and October 2026.

Some Hongkongers, however, said the handout was not enough to encourage couples to have children. Critics pointed to insufficient childcare options as well as the high cost of raising a child in the city.

See also: Hong Kong gov’t should display baby photos in offices to encourage civil servants to have children, lawmaker says

The Hong Kong leader on Wednesday pledged to enhance infant and child daycare services by setting up 15 subsidised daycare centres in the next three years. The Social Welfare Department will also allocate more care-service places for infants and toddlers from birth to two years, he said.

Hong kong policy address 2025

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