Here’s How to Lower Your Income Tax in Singapore in 2025

Tax season is here, and while paying taxes is inevitable, paying more than you need to isn’t. Every dollar you save on taxes is one that can be put toward your goals—whether it’s growing your retirement fund, supporting your family, or investing for the future. Singapore’s tax system offers numerous reliefs, deductions, and rebates that can help you legally reduce your taxable income.

Knowing how to maximize these benefits isn’t just a good idea; it’s the key to optimizing your finances in the Year of Assessment (YA) 2025.

Basics guide for taxpayers

Understanding your tax obligations in Singapore is essential for compliance and avoiding unnecessary penalties. Here are the key aspects every taxpayer should know:

Update your particulars

Keeping your personal details accurate is crucial for maintaining a smooth tax process. Taxpayers should ensure that their contact information, including phone numbers and residential addresses, is always up to date via the myTax Portal. This ensures that all tax-related notifications and correspondence are received promptly. 

Failure to update your particulars can result in missed notifications, delayed tax filings, and potential penalties, which may complicate your tax compliance.

Obligation to file tax

Taxable income in Singapore includes various sources such as employment income, rental income, and other earnings like dividends, subject to specific conditions. Taxpayers have an obligation to file their taxes either manually or through the No-Filing Service (NFS). Under the NFS, taxpayers are pre-assessed based on available data, but it remains their responsibility to verify the accuracy of their tax bills. The annual filing period runs from 1 March to 18 April, and it is important to adhere to these deadlines to avoid penalties for late submissions or inaccuracies in the tax return.

Digital services for taxpayers

The myTax Portal serves as a comprehensive platform for managing all tax-related matters. Taxpayers can use this portal to file their tax returns, check Notices of Assessment, make payments, and request refunds. The portal offers a convenient, secure, and accessible way to manage taxes anytime, providing significant ease and efficiency in fulfilling tax obligations.

Tax clearance for foreigners

Foreigners leaving Singapore or changing employment must fulfill tax clearance obligations. Employers are required to file Form IR21 at least one month before the employee’s departure or cessation of employment. This process ensures that taxes on income, including stock options and awards, are settled before the individual leaves the country. Failure to comply with tax clearance requirements can result in unpaid taxes, which may lead to the individual being barred from leaving Singapore.

By staying informed and proactive about these basics, taxpayers can ensure compliance and avoid unnecessary complications. For detailed information, always refer to the IRAS official website or consult a tax professional.

Singapore’s income tax rates for YA 2025

Singapore’s personal income tax system follows a progressive structure, ensuring that individuals contribute to the nation's revenue based on their ability to pay. This equitable framework divides taxable income into brackets, with each bracket taxed at a specific rate. The system ensures fairness by applying higher tax rates only to the portion of income that exceeds the threshold for each bracket, rather than taxing the entire income at the highest rate.

For instance, if your taxable income is S$40,000, the first S$20,000 is tax-free, the next S$10,000 is taxed at 2%, and the remaining S$10,000 is taxed at 3.5%. This incremental calculation prevents disproportionate taxation and aligns with the principle of fairness, where higher earners pay progressively more without overburdening lower-income groups.

This structure not only fosters social equity but also provides opportunities for taxpayers to reduce their chargeable income through effective tax relief strategies, further optimizing their financial contributions while benefiting from a balanced taxation system.This progressive tax structure ensures fairness while encouraging economic contribution from higher-income earners. Taxpayers are encouraged to review their income levels and plan their finances accordingly. For more details, refer to the IRAS official website.

Understanding taxable and non-taxable income

A clear understanding of taxable and non-taxable income is essential for managing your tax obligations effectively in Singapore. This section outlines the differences and provides examples to help taxpayers categorize their earnings accurately.

Taxable income

Taxable income in Singapore refers to earnings that are subject to income tax under the country’s laws. This includes employment income, which encompasses salaries, bonuses, allowances, and other cash benefits received as part of one’s job. Another category is business income, which comprises profits generated from operating a trade, business, or profession.

Additionally, rental income—earnings from leasing residential or commercial property—is considered taxable. Investment income, such as dividends, interest, and other returns from investments, may also be subject to tax, although specific exemptions might apply. Lastly, overseas income is generally not taxable unless it is received through partnerships in Singapore or certain exceptions apply (e.g., income brought into Singapore under specific conditions). Understanding these income categories is crucial for accurate tax reporting and compliance.

Non-taxable income

Non-taxable income refers to earnings that are exempt from income tax in Singapore. One common example is gifts and inheritances, which include monetary gifts or assets received from family or friends. Additionally, certain dividends distributed by Singapore-resident companies under the one-tier corporate tax system are not subject to tax.

Another key category is CPF contributions, encompassing both employer and employee contributions to the Central Provident Fund. Insurance payouts, such as proceeds from life insurance policies, are also exempt from taxation. Lastly, scholarships and bursaries awarded to students as educational grants are considered non-taxable, providing further financial relief to recipients.

1. Taxable income example:
   John earns S$80,000 annually as a software engineer. His salary, bonuses, and allowances are fully taxable.
2. Non-taxable income example:
   Mary received S$20,000 as a gift from her parents and an insurance payout of S$50,000. Both amounts are non-taxable.

By understanding these categories, taxpayers can accurately report their earnings and avoid under-declaring taxable income. For comprehensive details, refer to the IRAS official website.

How to calculate chargeable income in Singapore

Calculating your chargeable income is a critical step in determining your income tax liability in Singapore. Chargeable income refers to your taxable income after deducting all applicable reliefs, rebates, and deductions. Here's a step-by-step guide to help you calculate your chargeable income.

Step 1: Determine your total income
Begin by identifying all sources of taxable income. These include employment income such as salaries, bonuses, and allowances; business income derived from profits in trade, business, or profession; rental income from leasing properties; and investment income like dividends and interest (subject to specific conditions).

Step 2: Subtract non-taxable income
Next, exclude any income that is exempt from tax. Examples of non-taxable income include CPF contributions, dividends distributed under the one-tier corporate tax system, and proceeds from gifts, inheritances, and insurance payouts.

Step 3: Deduct allowable expenses
Claim allowable expenses that are directly related to generating your income. For self-employed individuals, this may include business expenses, while property owners can deduct rental property maintenance costs.

Step 4: Apply personal reliefs
Singapore offers a variety of personal tax reliefs to reduce your taxable income. Examples include the Earned Income Relief for income earned through employment or trade, the Parenthood Tax Rebate for eligible parents, and CPF Relief for mandatory CPF contributions. For a comprehensive list, consult the IRAS website.

Step 5: Calculate your chargeable income
The formula for chargeable income is:
Chargeable Income = Total Income - Non-Taxable Income - Allowable Expenses - Personal Reliefs

Below is an example how to calculate your chargeable income

• Total Income: S$100,000 (employment income)
• Non-Taxable Income: S$10,000 (CPF contributions)
• Allowable Expenses: S$5,000 (work-related expenses)
• Personal Reliefs: S$20,000 (earned income relief and parenthood tax rebate)

Chargeable Income = S$100,000 - S$10,000 - S$5,000 - S$20,000 = S$65,000

The chargeable income is S$65,000. Based on the YA 2025 progressive tax rates, the income tax will be calculated incrementally.

Income tax rates from YA 2024 onwards

Singapore adopts a progressive income tax system, ensuring that higher-income earners contribute a greater percentage of their income in taxes. Below is a summary of the tax rates applicable for Year of Assessment (YA) 2024 onwards, along with insights into how tax liabilities can escalate for high-income earners.

Singapore's progressive income tax system ensures fairness by taxing only the portion of income that falls within each tax bracket at the corresponding rate. For example, if an individual has a chargeable income of S$100,000, the first S$20,000 is tax-free, the next S$10,000 is taxed at 2%, and so on. This incremental approach prevents overburdening taxpayers, particularly those with lower incomes, while ensuring that higher earners contribute proportionately more.

For higher-income individuals, the tax liability escalates significantly once chargeable income exceeds S$1,000,000, where any additional income is taxed at 24%. For instance, an individual earning S$1,500,000 would pay a total of S$319,150 in taxes. This comprises S$199,150 for the first S$1,000,000 and 24% on the remaining S$500,000, amounting to S$120,000. This example underscores the steep tax burden faced by high earners, emphasizing the importance of effective financial planning.

The steep taxation at higher income levels reflects the principles of equity embedded in Singapore’s progressive tax system. By applying higher rates to higher incomes, the system ensures wealth redistribution and supports public services. However, this also means that the marginal tax rate—the rate applied to the last dollar earned—can substantially increase total tax liability. High-income earners are therefore encouraged to adopt tax relief and deduction strategies to optimize their financial obligations while contributing to the nation's fiscal objectives.

Tax relief schemes to reduce your personal income tax in Singapore

Singapore offers various tax relief schemes designed to reduce the personal income tax burden on its residents. These reliefs align with social objectives, such as encouraging family support, retirement savings, and continuous education. Below is an overview of key tax reliefs available to Singaporean taxpayers.

Grouping tax relief schemes into strategies for maximizing tax savings

To make the most of Singapore’s tax relief schemes, taxpayers can adopt a strategic approach by grouping reliefs based on their objectives. Here are practical strategies to help maximize your tax savings.

1. Family-Centric Strategy
Taxpayers with family responsibilities can significantly reduce their taxable income by focusing on reliefs that support dependents and family members. Qualifying Child Relief (QCR) and Handicapped Child Relief (HCR) allow claims of up to S$4,000 and S$7,500 per child, respectively. Working Mother’s Child Relief (WMCR) provides an additional 15% to 25% of taxable income per child, capped at S$50,000 when combined with QCR and HCR. Parent Relief and Handicapped Parent Relief offer between S$5,500 and S$14,000 per dependent parent or grandparent. For those supporting a spouse, Spouse Relief provides S$2,000, while Handicapped Spouse Relief grants S$5,500. By combining these reliefs, especially for multiple dependents, taxpayers can achieve substantial tax savings.

2. Retirement and Savings Strategy
For individuals prioritizing long-term financial security, maximizing retirement and savings-related tax reliefs is key. CPF Cash Top-Up Relief allows claims of up to S$16,000 annually for contributions to CPF accounts, split between self and family. Supplementary Retirement Scheme (SRS) Relief provides tax deductions of up to S$15,300 for citizens and permanent residents, or S$35,700 for foreigners. High-income earners in higher tax brackets should prioritize SRS contributions, as they offer immediate reductions in taxable income while building retirement savings.

3. Professional Development Strategy
Taxpayers looking to enhance their careers can benefit from reliefs that support skill development and professional growth. Course Fees Relief allows claims of up to S$5,500 annually for courses or certifications relevant to one’s current employment or business. This relief is particularly useful for those pursuing professional qualifications or upgrading their skills to remain competitive in their industries.

4. National Service Strategy
National Servicemen (NSmen) and their families can take advantage of reliefs tied to National Service contributions. NSman Relief provides savings ranging from S$750 to S$5,000, depending on the NSman’s status and role. Eligible family members, such as a wife or parents, can also claim their respective NSman reliefs, maximizing the collective tax savings within the family.

5. Insurance and Financial Planning Strategy
For individuals with minimal CPF contributions, leveraging reliefs tied to insurance and financial planning can reduce tax liabilities. Life Insurance Relief allows claims for premiums paid on life insurance policies if the total CPF contributions and insurance premiums are below S$5,000. This relief is an excellent option for taxpayers looking to optimize their tax savings while securing financial protection.

6. General Maximization Strategy
To achieve optimal tax savings, taxpayers should strategically combine various relief schemes while adhering to the S$80,000 cap on total personal reliefs per Year of Assessment (YA). Prioritize reliefs with the highest potential savings, such as CPF top-ups and QCR/WMCR, to maximize benefits without exceeding the cap. This approach ensures taxpayers can align their tax relief claims with personal financial goals while staying within regulatory limits.

By grouping tax reliefs into these strategies, taxpayers can effectively plan their finances to reduce tax liabilities and achieve their objectives. For more information, visit the IRAS official website or consult a tax professional.

Personal income tax relief cap

It's important to note that the total amount of all personal income tax reliefs claimed is capped at S$80,000 per YA. This cap ensures that the tax system remains progressive and equitable.

Tax relief strategy 1: Invest in your future

Investing in your retirement and healthcare is a dual-purpose strategy that not only secures your financial future but also provides immediate tax savings.

CPF Cash Top-Ups allow individuals to boost their CPF Special Account (SA) or Retirement Account (RA) with voluntary contributions. These top-ups are eligible for a tax relief of up to S$8,000 annually. An additional relief of up to S$8,000 is granted for top-ups made to family members’ CPF accounts, such as parents, spouses, or siblings.

The Supplementary Retirement Scheme (SRS) is another effective tool. Contributions to the SRS reduce your taxable income by up to S$15,300 annually for Singaporeans and Permanent Residents, and up to S$35,700 for foreigners. The SRS also offers flexibility in managing investments for retirement. 

Platforms like StashAway allow you to invest your Supplementary Retirement Scheme (SRS) funds in globally diversified portfolios, helping you grow your retirement savings while benefiting from tax relief. Instead of leaving your SRS contributions idle, investing with StashAway ensures your money is working for you through low-cost, intelligent, and risk-managed portfolios. With StashAway, you can take advantage of long-term compounding while optimizing your tax savings.

Tax relief strategy 2: Build a family-friendly tax plan

Supporting your family is not only fulfilling but also financially rewarding when it comes to tax relief.

The Qualifying Child Relief (QCR) provides S$4,000 per child, or S$7,500 for a handicapped child. This relief acknowledges the financial responsibilities of raising children. For working mothers, the Working Mother’s Child Relief (WMCR) offers additional percentage-based relief, ranging from 15% to 25% of earned income per child. These two reliefs combined can significantly reduce taxable income.

For families with grandparents helping to care for children, the Grandparent Caregiver Relief provides an additional S$3,000. The Parenthood Tax Rebate rewards parents with S$5,000 for the first child, S$10,000 for the second, and S$20,000 for each subsequent child.

Spousal support is also recognized through the Spouse Relief of S$2,000 for non-working spouses and Handicapped Spouse Relief of S$5,500 for spouses with disabilities.

Example: A working mother with three children, one of whom is handicapped, and a grandparent caregiver could reduce her taxable income by tens of thousands of dollars through these reliefs.

Tax relief strategy 3: Support your parents and dependents

Caring for elderly or dependent family members is not only a moral responsibility but also a source of significant tax relief.

The Parent Relief grants S$9,000 per parent if they live with you, or S$5,500 if they live separately. For parents with disabilities, the Handicapped Parent Relief increases these amounts to S$14,000 and S$10,000, respectively.

Similarly, the Handicapped Sibling Relief provides S$5,500 for individuals supporting handicapped siblings. These reliefs recognize the financial and emotional commitment of caregiving.

Example: A caregiver living with two elderly parents can claim up to S$18,000 in reliefs, reducing their taxable income substantially.

Tax relief strategy 4: Upgrade your skills and career

Investing in education and skill development can yield both professional and tax benefits. Course Fee Relief allows individuals to claim up to S$5,500 for fees related to courses that enhance current or future employment prospects. This relief encourages career growth by offsetting educational costs.

Additionally, SkillsFuture Credits provide government grants for training programs, with out-of-pocket expenses potentially qualifying for tax relief. Combining these initiatives enables individuals to upskill while enjoying immediate tax savings. For example, enrolling in a career-switch course can reduce taxable income while opening new job opportunities.

Tax relief strategy 5: Maximize work-related and investment deductions

Work-related and investment deductions can substantially lower taxable income. Employees can claim Employment Expenses such as client entertainment, work-from-home costs, and other necessary unreimbursed expenses. For property owners, Rental Income Deductions allow for a 15% deemed expense plus actual mortgage interest to offset rental earnings.

Self-employed individuals benefit from Self-Employment Deductions, which include allowable business expenses like salaries, research and development costs, and insurance premiums. By carefully documenting and claiming these deductions, both employees and business owners can significantly reduce their taxable income.

Tax relief strategy 6: Give back to society

Charitable donations are rewarded with generous tax deductions. Contributions to Institutions of a Public Character (IPC) qualify for a 250% tax deduction, covering donations in cash, shares, artworks, or even land. This makes giving back to society a financially rewarding gesture.

For instance, a S$10,000 donation results in a S$25,000 deduction from taxable income, significantly reducing the tax burden. By supporting approved charities, individuals can make a positive social impact while optimizing their tax positions.

Tax relief strategy 7: Additional tax relief opportunities

Several other reliefs cater to specific situations. Life Insurance Relief allows deductions on premiums if compulsory CPF contributions are below S$5,000. Married women or those with handicapped dependents can claim Foreign Domestic Worker Levy Relief, which provides relief equal to twice the annual levy for one domestic worker.

National Service members and their families can benefit from NSman Relief, with amounts ranging from S$750 to S$5,000 depending on their roles. These additional reliefs offer tailored support, ensuring individuals maximize their tax savings based on their unique circumstances.

How proper tax relief can reduce your income tax significantly

By reducing your chargeable income through eligible reliefs, you can move to a lower tax bracket, resulting in significant tax savings. For instance, decreasing your chargeable income from S$80,000 to S$70,000 reduces your tax payable from S$3,350 to S$2,650, saving you S$700. Similarly, a reduction from S$120,000 to S$110,000 lowers your tax from S$7,950 to S$6,800, yielding a saving of S$1,150.

Therefore, understanding and applying appropriate tax reliefs is crucial for effective tax planning. By doing so, you can optimize your financial position and ensure that you are not overpaying on your taxes. For detailed information on available reliefs and eligibility criteria, refer to the IRAS official website.