Marking Singapore’s 60th year of independence in 2025, Singapore’s Budget is positioned as “a Budget for all Singaporeans.” It aims to secure a prosperous and resilient future for Singapore amidst ongoing global challenges.
Building on the positive momentum of 2024 – characterized by 4.4% economic growth, easing core inflation, real wage growth, and the lowest income inequality since 2000 – the Budget addresses key areas such as rising living costs, economic growth and innovation, lifelong learning for workers, sustainability, social welfare, inclusivity, and national unity.
While PM Wong has outlined a comprehensive suite of measures to augment these areas, there have been fewer individual and employment tax-related proposals.
We have set out the key individual and employment tax related proposals below, with an overview of how it could impact individuals/businesses.
Another year of increase in CPF contribution rate for senior employees
CPF contribution rates for senior workers aged 55 to 65 years old will again increase by 1.5 percentage points in 2026 as part of the Government’s ongoing effort to help senior workers meet their retirement goals.
To ease the financial burden on employers, CPF transition offsets will be provided for another year, 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.
Personal income tax rebate for Year of Assessment (YA) 2025
As part of the SG60 package, the personal income tax rebate, which made a return in last year’s Budget, will continue for the Year of Assessment (YA) 2025 (calendar year 2024). For YA 2025, the rebate percentage has been increased from 50% to 60%, capped at S$200. This enhancement provides additional relief to all individual taxpayers.
Individuals for whom tax clearance returns have been filed for YA 2025 due to the cessation of their Singapore employment can expect a refund from this announced tax rebate. Employers should notify individuals who are tax-equalized or have a shared tax arrangement with the company to facilitate the sharing of any tax refund from this measure.
Additionally, hypothetical tax and tax equalization settlement calculations for tax-equalized individuals (to Singapore) may be updated to reflect the rebate.
Removal of CPF Cash Top-up relief for Matched contributions
From January 2026, the Government will launch a five-year Matched MediSave Scheme (MMSS) to boost MediSave savings for seniors with lower balances. Under this scheme, the Government will match every dollar of voluntary cash top-ups to the MediSave Account (MA) of eligible CPF members, up to S$1,000 per year. Anyone, including family members, employers, or community members, can make these contributions.
However, cash top-ups made from January 1, 2026, that qualify for the MMSS grant will not be eligible for CPF Cash Top-Up Relief from YA 2027. This change aligns with the current tax treatment under the Matched Retirement Savings Scheme (MRSS) introduced in last year’s Budget. Although this approach ensures consistency in tax rules, the removal of tax relief for these top-ups could potentially discourage taxpayers from making such contributions for themselves or their family members.
Recognition of the need for insurance coverage – could tax reliefs be in store?
PM Wong acknowledged the importance of adequate insurance coverage to ensure Singaporeans are well-protected and better equipped to manage rising medical costs. To encourage higher insurance uptake, the Government is exploring potential incentives, with details to be announced soon.
It remains to be seen if one of our wishlist items – tax deduction for medical and health insurance premiums, both for individuals and their dependents, will be introduced. Introducing such tax reliefs could promote a culture of health protection and well-being while also easing the demand on Government-funded or subsidized medical programs.
Overall, this budget delivers on its promise to benefit all Singaporeans. While there are only a few specific measures focussed on individual and employment taxes, the broader initiatives aimed at enhancing Singapore’s appeal as a global and regional hub, developing a more skilled and competent workforce, and strengthening the Singaporean leadership core are particularly noteworthy. These efforts are expected to attract more global and regional talent and also enable more Singaporeans to venture overseas, further boosting the vibrancy of Singapore’s global mobility landscape.
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
Ben Neumann
Singapore Leader
Grace Huang
Partner, Tax
Yang Li
Partner, Immigration
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