Understanding Personal Income Tax Rates in Singapore

Resident tax rates

Singapore’s resident income tax system is progressive, meaning that higher-income earners are taxed at higher rates. The tax rates range from 0% for the first S$20,000 chargeable income to 24% for income exceeding S$1 million.

Singapore Personal Income Tax Rates for Year of Assessment (YA) 2024

However, various tax reliefs, rebates, and deductions are available to residents, which can help reduce their overall tax liability.

These include reliefs for earned income, spouses, parents, children, and working mothers. Additionally, residents can benefit from rebates like the GST Voucher and the Parenthood Tax Rebate.

Non-resident tax rates

Singapore’s non-resident personal tax rates differ from those of residents. Non-resident tax is at a flat rate of 24% on most types of income, such as rental income, director’s fees, and consultation fees.

However, there is a concession for employment income, which is taxed at 15% or the progressive resident tax rates with personal reliefs.

This means that if the calculated tax using the resident tax rates (with reliefs) is higher than 15%, the non-resident individual’s tax will be at that higher rate. It is important to note that this concession does not apply to non-resident directors, who are taxed at the full 24% rate.

Calculating withholding tax

Calculating personal tax rates in Singapore involves determining your tax residency status and influencing the applicable rates and reliefs.

Residents enjoy progressive tax rates ranging from 0% to 24% for 2024, while non-resident tax is at a flat rate of 15% or the progressive resident rates, whichever is higher.

The next step is calculating your chargeable income by deducting allowable expenses and reliefs from your total income. Then, apply the appropriate rates to the different income brackets to determine the total tax payable.

Remember to factor in any eligible tax reliefs and rebates, as these can significantly reduce your tax liability.

The final step is subtracting the value of these reliefs and rebates from the total tax payable, giving you your net tax payable for the calendar year.

Taxable and non-taxable income in Singapore

When it comes to personal income tax rates in Singapore, it’s crucial to understand what types of income are taxable and vice versa.

Types of taxable income

In Singapore, taxable income includes a wide range of sources:

• employment income
• self-employment income
• rental income, and
• investment income like dividends and interest.

If you’re a tax resident, even your overseas income remitted into Singapore may be subject to tax purposes.

It’s important to remember that your taxable income includes more than just your basic salary; it also encompasses bonuses, allowances, and benefits-in-kind. For example, even an annual holiday trip provided by your company can be considered taxable income.

Non-taxable income sources

Some types of income are exempt from Singapore tax. For example, you won’t pay personal taxes on capital gains or inheritance. The tax authority also offers certain government grants and exempted payouts.

You can reduce your taxable income by taking advantage of various allowances, reliefs, and deductions.

For instance, working moms might qualify for the Working Mother’s Child Relief, which can help reduce their tax bill.

Exempted income

Singapore also offers tax exemptions on certain types of income to encourage specific activities or support certain groups of taxpayers. One notable example is the Not Ordinarily Resident (NOR) scheme, which allows qualifying foreign professionals to enjoy tax exemptions on a portion of their Singapore employment income for a limited period.

Tax residency status and its impact on withholding tax

When it comes to personal income tax rates in Singapore, your tax residency status plays a crucial role in determining your withholding tax obligations and benefits.

Not sure what’s the Singapore withholding tax exemption? Fret not, we have created an in-depth guide just for that.

Determining your tax residency

Your tax residency status is determined by your stay in the country. Generally, you’ll be considered a tax resident if you’re a Singapore permanent resident or have stayed or worked in Singapore for 183 days or more in a year.

Benefits of being a tax resident

Being a Singapore citizen comes with several benefits. For one, you’ll be eligible for personal tax reliefs, such as the Earned Income Relief and the CPF Relief. These reliefs can help to significantly reduce your taxable income and lower your overall tax bill.

Additionally, tax residents may enjoy lower rates on certain types of income, such as dividend income from Singapore companies. And if you’re a foreign professional working in Singapore, being a tax resident can also make you eligible for the Not Ordinarily Resident (NOR) scheme, which offers tax exemptions on a portion of your employment income.

Non-resident public tax obligations

On the other hand, if you’re a non-resident taxpayer in Singapore, you’ll generally face higher rates and fewer tax benefits. Non-residents are subject to tax on income derived from Singapore sources, such as employment income earned during their stay in the country.

One thing to note is that non-residents may not be eligible for certain tax reliefs and deductions available to tax residents. And if you’re a non-resident director or professional providing services in Singapore, you may be subject to withholding tax on your income.

Tax reliefs and rebates for individuals in Singapore

As someone who pays taxes in Singapore, it’s smart to look into various reliefs and rebates that could lower your bill.

Types of tax reliefs

In Singapore, there are plenty of tax reliefs aimed at supporting people through various phases of their lives. Common ones include Earned Income Relief, which benefits workers, CPF Relief, which applies when you contribute to your own CPF account, and a special Working Mother’s Child Relief for mothers juggling work and children.

Reliefs are available for specific situations, such as the Parent Relief for supporting your parents or grandparents and the NSman Relief for national servicemen.

Eligibility for tax rebates

Singapore includes tax rebates in its financial support options to help taxpayers directly. Typically, these are short-term solutions revealed each year in the Budget announcement.

For example, in 2020, a one-off Personal Income Tax Rebate of 20%, capped at $500, was granted to all tax-resident individuals. This rebate aimed to provide some relief to taxpayers amidst the economic challenges brought about by the COVID-19 pandemic.

Claiming tax reliefs and rebates

To claim tax reliefs and rebates, you must file your annual income tax return with the Inland Revenue Authority of Singapore (IRAS). Some reliefs, such as Earned Income Relief and CPF Relief, will be automatically granted based on the information in your tax return.

You’ll need supporting documents for claims proof, like the Working Mother’s Child Relief or Parent Relief. Keep everything organized and submit it properly so there aren’t any hiccups in processing your taxes.

Filing your personal income tax return in Singapore

As a taxpayer in Singapore, filing your tax return is an annual obligation that you can’t afford to overlook.