United States vs Hong Kong taxes (2026): territorial salaries tax vs worldwide tax

United States vs Hong Kong tax rates at a glance

Tax	🇺🇸 United States	🇭🇰 Hong Kong
Income tax	Personal income tax: 10% - 37% Social Security: 6.2% Medicare: 1.45% Additional Medicare: 0.9% State income tax: Varies	Salaries tax: 2% - 17% Standard rate cap: 15% / 16% Foreign-sourced salary: 0% / source-based Employee MPF: 5% Employer MPF: 5% Tax on wages: 2% - 17%
Corporate tax	C corporation tax: 21% CAMT: 15% Pass-through entities: Different State tax: Varies	Corporate profits tax: 8.25% / 16.5% Standard company tax: 16.5% Offshore profits: 0% DMTT for in-scope MNEs: 15% Dividend withholding tax: 0% VAT / GST: 0%
Capital gains tax	Long-term capital gains: 0% - 20% Short-term capital gains: 10% - 37% Qualified dividends: 0% - 20% NIIT: 3.8%	Capital gains tax: 0% Crypto capital gains tax: 0% Shares and securities gains: 0% Real estate gains: 0%
Dividend tax	Qualified dividends: 0% - 20% Ordinary dividends: 10% - 37% NIIT: 3.8% State tax: Varies	Dividend withholding tax: 0% Domestic dividend tax: 0% Foreign dividend tax: 0%
Wealth tax	Net wealth tax: 0% Property tax: Varies Estate tax: Up to 40% Gift tax: Up to 40%	Net wealth tax: 0% Net worth tax: 0% Annual asset tax: 0%
Inheritance / estate tax	Federal inheritance tax: 0% Federal estate tax: Up to 40% Federal gift tax: Up to 40% Basic exclusion: $15,000,000	Inheritance tax: 0% Estate tax: 0% Gift tax: 0% Probate tax: 0%
VAT / GST / sales tax	Sales tax: Varies by state	VAT / GST: 0%
Other key taxes	None listed on country overview	Salaries tax: 2% - 17% Standard rate cap: 15% / 16%
Tax base	Citizens and resident aliens generally taxed worldwide	Territorial: generally Hong Kong-source income and profits
Standard rate cap	No equivalent federal cap; 37% ordinary top rate	15% / 16% salaries-tax standard-rate cap

Who wins on each tax

Personal income taxHong Kong

Hong Kong salaries tax is 2% to 17% with a 15% / 16% standard-rate cap; the U.S. federal ordinary top rate is 37% before state tax.

Corporate taxHong Kong

Hong Kong two-tier profits tax is 8.25% / 16.5% on Hong Kong-sourced profits; U.S. C corporations pay 21% federally plus possible state tax.

Capital gains taxHong Kong

Hong Kong generally has no CGT on capital assets; the U.S. taxes long-term gains at 0% to 20% federally and short-term gains as ordinary income.

Estate / inheritance taxHong Kong

Hong Kong has no inheritance tax; the U.S. federal estate tax can reach 40%.

VAT / GSTHong Kong

Hong Kong has no GST or VAT; the U.S. has no federal VAT but state and local sales taxes are common.

The verdict

Hong Kong is the lighter local system. Salaries tax is progressive from 2% to 17% with a standard-rate cap of 15% / 16%, two-tier profits tax is 8.25% / 16.5%, and there is generally no personal capital gains tax, dividend withholding tax, GST or inheritance tax. The United States uses 10% to 37% federal ordinary rates, 21% federal C-corporation tax, 0% to 20% long-term gains and estate tax of up to 40%.

Territorial tax is not a U.S. passport waiver. Hong Kong generally taxes Hong Kong-sourced employment, profits and property income rather than worldwide income. A U.S. citizen who takes a Hong Kong ID still has U.S. worldwide filing and possible U.S. tax, including on income Hong Kong ignores.

Choose Hong Kong for a genuine Asia operating and banking base with source-based tax. Choose the United States for customers, capital and legal infrastructure. Remote founders who never source income in Hong Kong should not expect the salaries-tax table to save them from the IRS.

How to read this comparison

Hong Kong is a source jurisdiction. The United States is a citizenship jurisdiction. That single design difference outweighs most of the rate table for anyone holding a U.S. passport.

Hong Kong does not tax a person's global pile of income. Employment is salaries tax, business is profits tax, and rent is property tax. Salaries tax is progressive from 2% to 17%, with a standard-rate cap of 15% / 16% so the progressive scale does not run away. Two-tier profits tax charges 8.25% on the first HKD 2 million of assessable profits and 16.5% above that, and genuine offshore profits can stay outside profits tax when the source rules are met. There is generally no tax on capital assets sold as capital, no dividend withholding, no GST and no inheritance tax.

The United States starts in a different place. Citizens and resident aliens are generally taxed on worldwide income whether the salary is earned in Central or in Chicago. Federal ordinary rates run from 10% to 37%. Long-term gains and qualified dividends can use 0% to 20%. C corporations pay 21% federally. The federal estate tax can reach 40%. States then add income, sales and property taxes. There is no federal VAT, which is one of the few areas where the United States resembles Hong Kong's consumption-tax gap.

A U.S. citizen who relocates to Hong Kong can therefore collect a light local assessment and a full IRS year at the same time. Foreign tax credits may absorb some U.S. tax on Hong Kong-source salary. They do not automatically shelter foreign-source investment income that Hong Kong never taxed. FBAR, Form 8938 and CFC-style reporting still apply. Hong Kong territoriality is not a substitute for expatriation.

Substance and source still have to be real. A company that books invoices through Hong Kong while management sits in California is arguing with both the Inland Revenue Department and the IRS. Stamp duty on property and stock transfers can also surprise people who heard “no GST.” Use Hong Kong when the work, contracts and profits arise there. Use the United States when the commercial centre is American. If you keep U.S. citizenship, model both answers on the same income.

Which one fits you

🇺🇸 Choose United States if you're a…

Businesses that need U.S. customers, talent or fundraising
People whose income is U.S.-source anyway
Founders who will remain U.S. persons and want a domestic legal base

🇭🇰 Choose Hong Kong if you're a…

Employees paid for Hong Kong-source work
Trading companies with Hong Kong-source profits
Investors who will not be taxed locally on private capital gains

Frequently asked questions

Is Hong Kong lower tax than the United States?

Yes for local salaries, profits, capital gains, dividends and estates. A U.S. citizen can still owe U.S. tax on the same income because U.S. worldwide taxation does not stop at the Hong Kong border.

Does Hong Kong tax foreign employment income?

Hong Kong generally taxes Hong Kong-source employment income under salaries tax. Another country, including the United States for its citizens, can still tax the same person on a worldwide basis.

Does Hong Kong have GST?

No. There is no VAT or GST, though stamp duty, rates and other transaction taxes can still apply.