Global uncertainty and headwinds hitting business and nations at the same time is something we have spoken extensively about at Vialto over recent months. Against the backdrop of ‘profound global geo-political change’, this year’s Budget reinforces Singapore’s drive to continually review and refresh its long-term economic strategy and ensure that the nation is agile in the face of technological disruption to its workforce. This includes significant focus on driving artificial intelligence (AI) adoption, measures to cultivate a resilient and skilled workforce, and bolster support for families and lower-income households to enable Singapore and Singaporeans to move forward with confidence.
While Prime Minister Lawrence Wong introduced a comprehensive suite of proposals to support this vision, there were comparatively fewer proposals relating specifically to individual and employment taxes or immigration.
Below, we summarise the key tax and immigration updates, together with our observations on the potential impact for individuals and businesses.
Another year of increase in CPF contribution rate for senior employees
CPF contribution rates for senior workers aged 55 to 65 years old were increased by 1.5 percentage points in 2026 as part of the Government’s ongoing efforts to help senior workers meet their retirement goals.
With effect from 1 January 2027, the total CPF contribution rates will be further raised by 1.5 percentage points for employees aged above 55 to 60, and 1.0 percentage point for employees aged above 60 to 65.
To ease the financial burden on employers, CPF transition offsets equivalent to half of the 2027 increase in employer CPF contributions will be provided, partially covering the additional costs associated with the higher contribution rates.
Employers should update their payroll systems to reflect the revised contribution rates and ensure accurate contributions.
Extension of tax relief for donations
To encourage sustained philanthropy and volunteerism, the government will extend tax deductions (up to 250 per cent tax deductions) for qualifying donations to Institutions of a Public Character (IPCs) and other eligible institutions for another three years until end-2029.
IPCs are exempt or registered charities which can issue tax deduction receipts to donors for qualifying donations made.
Further adjustments to qualifying salaries for work pass holders and work permit levies
As part of the Singapore government’s continuous effort to maintain a high-quality foreign talent pool to complement and strengthen the local workforce, further adjustments will be made to the qualifying salaries of work pass holders.
The minimum qualifying salaries for work pass holders will increase as follows:
Employment Pass holders
S Pass holders
These changes take effect for new work pass applications from January 2027, and for renewal applications from January 2028 to allow businesses time to adjust.
These adjustments reflect the Government’s continued focus on maintaining a high-quality foreign workforce while strengthening the local talent pipeline, and will have implications for compensation structuring, hiring budgets, and medium-term workforce planning.
COMPASS exemption criteria and ONE Pass salary criteria remain unchanged
Although the government has recently revised work pass qualifying salaries and introduced sector-specific salary benchmarks in November 2025, there have been no corresponding changes to the COMPASS exemption criteria. In particular, the fixed monthly salary threshold of S$22,500 and the ONE Pass qualifying salary of S$30,000 remain unchanged.
Increase in work permit levies
The monthly levy rate for basic-skilled workers will be revised in selected sectors as follows:
In addition, the levy tier structure in both the manufacturing and services sectors will be simplified. The levy changes will take effect from 2028 to provide businesses with lead time to plan for cost adjustments and manpower strategies.
Our recommendations
In light of these upcoming changes, employers should proactively review workforce planning and cost projections for 2027–2028, assess upcoming renewal cases against the revised salary benchmarks. It is also advisable to build sufficient lead time into recruitment planning for affected roles to mitigate compliance and hiring risks.
Our team remains available to support workforce planning, salary benchmarking, and immigration strategy reviews to help you prepare effectively for these developments.
Overall, while Budget 2026 did not introduce significant changes to individual income tax or immigration policy, employers should view these updates not as isolated adjustments, but as part of a broader structural shift requiring careful workforce planning, salary benchmarking and cost management over the next few years. Early preparation will be key to ensuring compliance, managing financial impact, and maintaining competitiveness in an evolving regulatory and ever changing workforce landscape.
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
Ben Neumann
Partner
Grace Huang
Partner
Yang Li
Partner
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