Understanding Personal Income Tax Rates and Brackets in Singapore

personal income tax

Personal income tax in Singapore is a vital aspect of the nation’s revenue, amounting to $17.53 billion in 2023, contributing significantly to government funds. Unlike the flat 17% corporate income tax rate, personal income tax follows a progressive system, wherein higher earners bear a larger tax burden.

Income Tax Brackets Overview

In Singapore, there exist 12 income tax brackets for the year of assessment 2024, indicating an increase from the previous year. These brackets aim to impose higher taxes on individuals with higher incomes. Remarkably, individuals earning $20,000 or less annually are exempt from income tax, benefitting nearly half of Singapore’s workforce.

As illustrated in the income tax bracket table, tax rates escalate as income rises, reaching a peak of 24% for those earning above $1 million per annum in 2024. The addition of two new tax brackets, introduced during Budget 2023, targets top earners, projected to enhance government revenue by $170 million.

Chargeable Income in YA2024
Income Tax Rate
Gross Tax Payable
First $20,000
Next $10,000
0%
2%
$0
$200
First $30,000
Next $10,000
3.5%
$200
$350
First $40,000
Next $40,000
7%
$550
$2,800
First $80,000
Next $40,000
11.5%
$3,350
$4,600
First $120,000
Next $40,000
15%
$7,950
$6,000
First $160,000
Next $40,000
18%
$13,950
$7,200
First $200,000
Next $40,000
19%
$21,150
$7,600
First $240,000
Next $40,000
19.5%
$28,750
$7,800
First $280,000
Next $40,000
20%
$36,550
$8,000
First $320,000
Next $180,000
22%
$44,550
$39,500
First $500,000
Next $500,000
23%
$84,150
$115,000
First $1 million
Above $1 million
24%
$199,150
24% of excess income

Calculating Your Effective Tax Rate

Contrary to common belief, individuals are not taxed at their respective income tax bracket rates entirely. Instead, various segments of their income incur different tax rates. For instance, an individual earning $80,000 annually falls within the 7% tax bracket but is liable to pay only $3,350 in income tax, not the $5,600 suggested by a straightforward application of the tax rate.

This variance arises from the progressive nature of income tax, where specific portions of income remain untaxed. For example, the initial $20,000 is tax-exempt, while subsequent segments are taxed progressively. Consequently, the effective income tax rate typically proves lower than the nominal tax bracket rate.

personal income tax

Chargeable Income in YA2023
Gross Tax Payable
Income Tax Rate Bracket
Effective Income Tax Rate
First $20,000
$0
0%
0%
First $30,000
$200
2%
0.67%
First $40,000
$550
3.5%
1.38%
First $80,000
$3,350
7%
4.19%
First $120,000
$7,950
11.5%
6.63%
First $160,000
$13,950
15%
8.72%
First $200,000
$21,150
18%
10.58%
First $240,000
$28,750
19%
11.98%
First $280,000
$36,550
19.5%
13.05%
First $320,000
$44,550
20%
13.92%
First $500,000
 $84,150
22%
 16.82%
First $1 million
$199,150
23%
19.92%
Above $1 million
24%

Understanding Chargeable Income

Before delving into income tax rates and calculations, it’s crucial to grasp the concept of chargeable income. In Singapore, income tax applies solely to chargeable income, excluding certain earnings such as CPF contributions. Additionally, individuals may qualify for various tax deductions and reliefs, including the Earned Income Relief and Personal Income Tax rebate.

For instance, an individual earning $38,500 annually, below the age of 55, will not incur any income tax for the year of assessment 2024. This exemption stems from deducting CPF contributions from the total income, alongside applicable reliefs and rebates. Furthermore, eligibility for additional tax reliefs and deductions can further reduce an individual’s income tax liability.

Maximizing Tax Efficiency

To optimize tax efficiency and minimize tax liabilities, individuals can leverage available tax calculators provided by the Inland Revenue Authority of Singapore (IRAS). By utilizing these tools, taxpayers can accurately assess their income tax liabilities, and identify eligible deductions and reliefs, ensuring compliance with tax regulations while maximizing tax savings.

In conclusion, understanding personal income tax rates and brackets in Singapore is essential for individuals to manage their finances effectively. By comprehending the progressive nature of income tax, alongside available deductions and reliefs, taxpayers can navigate the tax landscape efficiently, minimizing tax burdens and maximizing savings.

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