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How much is the income tax rate in Singapore?
When filing income tax in Singapore, one of the first things to do is to determine your residency status.
By Dee Lim
SINGAPORE — There are five main taxes that one has to pay as a Singaporean or permanent resident, and income tax is one of these.
Yahoo Finance Singapore takes a look at everything you need to know about income tax – from what you need to know about how it's calculated to understanding tax residency, personal tax rebates and all the reliefs and deductions available.
How is income tax calculated in Singapore?
Generally, income earned in or derived from Singapore is subject to income tax, while overseas income received in Singapore is not taxable, except in some circumstances.
Income tax in Singapore is payable based on progressive tax rates and your tax residency status, so the first step you'll need to take is determining your residency status.
Singaporeans or permanent residents who live in Singapore, except for temporary absences, will be treated as a tax resident for a particular year of assessment (YA).
A foreigner who has stayed or worked in Singapore for at least 183 days in the previous calendar year, or continuously for three consecutive years, or continuously straddling two calendar years and the total period of stay is at least 183 days, will also be treated as a tax resident.
If you do not meet the conditions stated above, you will be treated as a non-resident of Singapore for tax purposes.
How do you calculate your income tax?
Singapore employs a progressive tax rate system for individuals, meaning the more you earn, the higher the tax rate. This progressive rate ranges from 0 per cent to 24 per cent.
From 2024 onwards, there is an increased rate for the top marginal personal income bracket. Income subjected to tax in excess of S$500,000 up to S$1 million will be taxed at 23 per cent, while income in excess of S$1 million will be taxed at 24 per cent – both were previously 22 per cent.
For Year of Assessment (YA) 2024, these are the rates that residents will pay:
To make sure you're doing the calculations properly, use the IRAS tax calculator.
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What are personal tax rebates?
Personal tax rebates are a valuable tool for reducing your tax liability, and these are offered by the government as a one-off in specific years – reasons can include helping tax payers manage the rising costs of living.
As announced in Budget 2024, a personal tax rebate will be granted to all tax residents for YA 2024. The rebate will be 50 per cent of tax payable, capped at S$200.
You will need to be considered a tax resident to enjoy these rebates, and are automatically computed and granted by the Inland Revenue Authority of Singapore (IRAS).
What are tax reliefs and deductions?
One of the ways to lower your overall tax burden is to make sure that you are utilising the deductions, reliefs and rebates available.
Some of these include more support for families such as the Qualifying Child Relief, Working Mother's Child Relief, Parenthood Tax Rebate, Foreign Domestic Worker Levy Relief, Grandparent Caregiver Relief, and even the NSman Wife Relief. To find out the right rebates which you might be entitled to, use this quiz.
Other tax reliefs also include life insurance relief, course fees relief, CPF cash top-up relief, and CPF relief for compulsory and voluntary Medisave contributions.
In terms of deductions, you can claim on rental expenses, qualifying donations, and for those who are self-employed or work in specific industries.
Another way to reduce your income tax is to contribute towards your Supplementary Retirement Scheme (SRS). These additional contributions are eligible for tax relief.
What is withholding tax on income of non-resident individuals?
For non-resident individuals earning income in Singapore, understanding withholding tax is crucial.
Withholding tax is applicable when payment is made to a non-resident company or individual – a percentage of that payment must be withheld and paid to IRAS as withholding tax. This could be payments made to non-resident companies, a non-resident director, non-resident professionals, those who have come to Singapore to give a lecture or workshop, or non-resident public entertainers or athletes, who come to Singapore to give a concert or attend competitions.
There is also withholding tax that is levied on foreigners or Singapore permanent residents if they are withdrawing from their Supplementary Retirement Scheme (SRS) fund.
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