Budget 2015: Personal income tax

SINGAPORE — Finance Minister Tharman Shanmugaratnam today (Feb 23) announced a 50 per cent personal income tax rebate, subject to a cap of S$1,000, to help middle-income taxpayers, for the Year of Assessment (YA) 2015.

He also announced an increase in personal income tax rates for the top 5 per cent of income earners, who earn at least S$160,000. This will take effect in YA 2017. Marginal tax rates for the highest income earners will increase by two percentage points, to 22 per cent. This applies to those earning above S$320,000.

Personal income tax is a direct tax levied on the income of a person. A personal income tax rebate — a cash sum given by the Government to offset the personal income tax bill — usually comes with a cap of between S$1,000 and S$2,000, and is part of the help provided to households to cope with rising costs of living. This year, the cap of S$1,000 aims to ensure benefits go mainly to middle-income to upper middle-income taxpayers.

Significant changes to personal income tax rates over the years include the reduction of the top personal income tax rate from 26 per cent to 22 per cent announced in Budget 2002, and a further reduction to 20 per cent for YA 2007, announced in Budget 2005.

Personal income tax rates and rebates over the years:

2015 - Taxpayers receive a 50 per cent rebate, capped at S$1,000. Personal income tax rates for top 5 per cent of income earners, who earn at least S$160,000, will be increased, starting from income earned in 2016 and on taxes to be paid in 2017.

Image: MOF

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(Source: IRAS, MOF, Straits Times)

2013 - Taxpayers below 60 years old received a 30 per cent personal income tax rebate, capped at S$1,500. The rebate grew to 50 per cent for those 60 years old and above.

2012 - New tax rates apply.

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Image: IRAS

2011 - Taxpayers received a 20 per cent personal income tax rebate, capped at S$2,000. New tax rates for 2012 announced.

Image: IRAS

2009 - Taxpayers received a 20 per cent personal income tax rebate, capped at S$2,000.

2008 - Singapore ended the 2007 fiscal year expecting a budget surplus of S$6.4 billion. Singaporeans received goodies such as personal income tax rebates of 20 per cent up to S$2,000, and “growth dividends” ranging from S$100 to S$400 in cash.

2007 - No rebates. New tax rates apply

2006 - New tax rates apply

2005 - Top marginal tax rate cut to 20 per cent, with corresponding reductions in the other income brackets. The top income earners’ personal income tax rate was cut to 21 per cent in YA 2006 and 20 per cent from YA 2007.

2002 - The top income earners’ personal income tax rate was reduced from 26 per cent to 22 per cent, and the income tax bands were consolidated from 10 to 7.