Income Tax in Singapore: Calculating Tax Payable (2020)
This entry is one of three Income Tax Guides for Singaporeans on Wiki.sg. Part One explains how you should calculate your income tax. Part Two complies the current Income Tax Reliefs in Singapore that can potentially reduce how much tax you pay. Part Three explains how to calculate your CPF Reliefs.
Singapore has a relatively low income tax rate of 0 to 22%. Taxpayers in Singapore with an annual income of ~$100,000 face a maximum rate of 11.5% compared to their counterparts in Japan (23%), Thailand (30%), New Zealand (33%), Canada (26%) and Germany (42%).[1] Singapore follows a progressive income tax model. Essentially the more you earn, the more income tax you pay. This entry illustrates how to calculate personal income tax in Singapore.
Calculating Income Tax
Annual tax filing is compulsory for tax residents earning an annual income of S$22,000 or more. If an individual earns less than S$22,000 a year, they are exempted from paying income tax.[2]
Step 1. Check & Claim Tax Reliefs
The first step is to check whether you qualify for any tax reliefs. Checking and claiming tax reliefs will reduce the amount of income tax you have to pay. All taxpayers are automatically given the Earned Income Relief. This relief does not need any action from the taxpayer. The relief amounts are as such:
| Age | Able-Bodied Persons | Handicapped Persons* | Refs. |
|---|---|---|---|
| < 55 years old | $1,000 | $4,000 | [3] |
| 55 - 59 years old | $6,000 | $10,000 | |
| > 59 years old | $8,000 | $12,000 |
*First-time handicapped tax-payers must submit this form to the Inland Revenue Authority of Singapore (IRAS) through e-mail.
Step 2. Calculate Your Chargeable income
The chargeable income determines how much income tax you have pay.
Chargeable Income = Total Annual Income - Total Amount of Tax Reliefs
To explain further, the chargeable income is what is left after deducting tax reliefs from your annual income.
Step 3: Figure Out Your Income Bracket & the Tax Payable
The table below shows the progressive income tax rates in Singapore.[4]
| Income Bracket / year | Chargeable Income | Rate (%) | Gross Tax Payable ($) | Maximum Tax Payable for Income Bracket |
|---|---|---|---|---|
| $20,000 - $30,000 | First $20,000 | 0 | 0 | $200 |
| Next $10,000 | 2 | $200 | ||
| $30,000 - $40,000 | First $30,000 | - | $200 | $550 |
| Next $10,000 | 3.5 | $350 | ||
| $40,000 - $80,000 | First $40,000 | - | $550 | $3,350 |
| Next $40,000 | 7 | $2,800 | ||
| $80,000 - $120,000 | First $80,000 | - | $3,350 | $7,950 |
| Next $40,000 | 11.5 | $4,600 | ||
| $120,000 - $160,000 | First $120,000 | - | $7,950 | $13,950 |
| Next $40,000 | 15 | $6,000 | ||
| $160,000 - $200,000 | First $160,000 | - | $13,950 | $21,150 |
| Next $40,000 | 18 | $7,200 | ||
| $200,000 - $240,000 | First $200,000 | - | $21,150 | $28,750 |
| Next $40,000 | 19 | $7,600 | ||
| $240,000 - $280,000 | First $240,000 | - | $28,750 | $36,550 |
| Next $40,000 | 19.5 | $7,800 | ||
| $280,000 - $320,000 | First $280,000 | - | $36,550 | $44,550 |
| Next $40,000 | 20 | $8,800 | ||
| $320,000 & above | First $320,000 | - | $44,550 | $114,950 & above |
| In excess of $320,000 | 22 | $70,400 & above |
Examples of Income Tax Calculation
The following case studies will illustrate how income tax is calculated.
Example 1
Mr Thio is a 29-year-old Singaporean Citizen who earned $50,750 in 2019. He had also qualified for $15,250 worth of tax reliefs. His chargeable income and tax payable are as follows.
| Income After Tax Reliefs | ||
|---|---|---|
| Yearly Income | $50,750 | |
| Less (Tax Reliefs) | $15,250 | |
| Chargeable Income | $35,500 | |
| Tax Payable | ||
After claiming the tax reliefs, Mr Thio's chargeable income is $35,550. He falls in the following income bracket: $30,000 - $40,000 (3.5% tax rate) | ||
| First S$30,000 | $200 | |
| Next $5,500 | 5,500 x 3.5% = $192.50 | |
| Gross Tax Payable | $392.50 | |
Before tax reliefs, Mr Thio would have had to pay $1,302.50 ($550 + $752.50). He saved $910 from qualifying for various tax relief schemes.
Example 2
Mdm Afiqah is a 63-year-old Singaporean Citizen who earned $250,000 in 2019. She had also qualified for $15,900 worth of tax reliefs. Her chargeable income and tax payable are as follows.
| Income After Tax Reliefs | |
|---|---|
| Yearly Income | $250,000 |
| Less (Tax Reliefs) | $15,900 |
| Chargeable Income | $234,100 |
| Tax Payable | |
After claiming the tax reliefs, Mdm Afiqah's chargeable income is $234,100. She falls in the following income bracket: $200,000 - $240,000 (19% tax rate) | |
| First $200,000 | $21,150 |
| Next $34,100 | 34,100 x 19% = $6,479 |
| Gross Tax Payable | $27,629 |
Before tax reliefs, Mdm Afiqah would have had to pay $30,700 ($28,750 + $1,950). She saved $3,071 from qualifying for various tax relief schemes.
References / Citations
- ↑ "Think You'll Be Paying Lesser Income Tax Elsewhere? Think Again….” Seedly. March 9, 2020. Accessed on 10 March 2020.
- ↑ “Individuals Exempted from Paying Tax”. IRAS. Accessed on 10 March 2020.
- ↑ “Earned Income Relief”. IRAS. Accessed on 12 March 2020.
- ↑ "Income Tax Rates”. IRAS. Accessed on 10 March 2020.