Corrections and Clarifications
Why is it that 40% of all workers do not pay Personal Income Tax (PIT)?
8 April 2025
Does it mean 40% of our workers earn less than $20,000 a year or less than $1,666 per month? Find out why some workers in Singapore pay little or no personal income tax, including how the income exemption threshold, tax reliefs, deductions and rebates reduce their tax payable.
How Does the $20,000 Income Exemption Threshold Work?
About 40% of the workers in Singapore do not pay Personal Income Tax (PIT) because we have a $20,000 income exemption threshold, and provide various PIT reliefs, deductions and rebates.
The $20,000 income exemption threshold means that the first $20,000 of an individual’s chargeable income is not taxed. You start paying PIT only when you earn more than $20,000 per year.
How Do Tax Reliefs, Deductions and Rebates Reduce Tax Payable?
Even if you earn more than $20,000 per year, your tax bill is further reduced because of various PIT reliefs, deductions, and rebates available. Examples: Earned Income Relief, CPF Relief, Qualifying Child Relief, 250% tax deduction for qualifying donations, and Parenthood Tax Rebate.
All in, all lower-income and even some middle-income workers pay low or no PIT.
Can Workers Earning Above the Median Pay Little or No Personal Income Tax?
The Ministry of Manpower (MOM) (opens in new tab) publishes the median gross monthly income of our employed residents annually; in 2024, employed residents earned a median gross monthly income of $4,333 (i.e. more than $50,000 per year, excluding employer CPF).
The two examples below illustrate how someone with an income above the median gross income (i.e. with an annual income above $50,000, excluding employer CPF) could be paying no or low PIT.
