Policy Address 2025: Hong Kong extends tax allowance for parents with newborns in its latest fertility push

Hong Kong parents with newborns are set to get more tax allowance as the city strives to boost its birth rate. 

Currently, parents receive a HK$260,000 tax exemption in the baby’s first year, but this is going to be extended for another year, said Chief Executive John Lee Ka-chiu in 2025 Policy Address. 

Those with older children will continue to get HK$130,000 of their taxable income exempted.

Hong Kong has been struggling with a declining birth rate, with the number of babies born dropping from 60,900 in 2016 to a low of 32,500 in 2022. In 2024, there was a slight improvement to 36,700 babies. 

A 36-year-old mother of a toddler from Kowloon welcomed the additional tax break. 

“As someone from the 80s generation, I really want to have children, this policy will help us to relieve some financial pressure,” said Ruby Tse, who is trying for a second child. 

 Lawmaker Chan Wing-kwong, who specializes in medicine, said the allowances are a welcome addition for families trying for more children, but it would be an unlikely fertility boost for those who don’t. 

“The additional newborn allowance is merely a drop in the bucket when it comes to the cost of raising a child in Hong Kong,” said Lin Sen, who has been married for six years but has remained reluctant to have a baby. 

Lin said the intensifying competition for schools and jobs a child might face in the future deters him from giving birth. 

Lee also pledged more childcare resources for babies and schoolchildren.

Chan said that although the direction of the current encouraging policies is right, a series of supporting measures must keep pace. 

The lawmaker called on the government to provide more measures for schools and job placements. 

“Only when the social environment can let people ‘live and work in peace and contentment’，will they be really willing to consider having children,” said Chan.