Why is it that 40% of all workers do not pay Personal Income Tax (PIT)?

About 40% of the workers in Singapore do not pay 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. 

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.

MOM 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.