Taxes 101: Your first timer guide

Why do we pay taxes?

We pay taxes to keep the country running and provide the services we all use every day. Think of it like chipping in for shared resources — things like public transport, schools, hospitals, and even hawker centre cleaning. They also support safety nets like CPF, housing grants, and help for lower-income families. While income tax is the one that most directly affects your take-home pay, it's just one part of the system. Most Singaporeans actually contribute more through indirect taxes like GST, petrol duties, and property-related taxes. In this series of articles, we’ll focus on how income tax works and what you need to know when you start earning money.

What is income tax in Singapore?

Income tax is what you pay to the government on the money you earned in the preceding year. This includes salary, bonuses, commissions, freelance/side-hustle income, rental income, and other sources of income. In Singapore, whether you pay income tax and how much you pay depends on two factors:

1. Whether you are considered a tax resident, and
2. Your chargeable income (the income that you are taxed on after deductions and tax reliefs)

For example, tax residents with chargeable income below $20,000 do not pay any income tax, whereas non-tax residents are taxed at a flat rate of 24% on their income (or at least 15% on their employment income). Non-residents are also not eligible for the same reliefs available to tax residents.

Singapore’s tax system

Singapore uses a progressive tax system. That means, if you are tax resident:

• You pay a higher tax rate only on the portion of your chargeable income that falls within the higher tax brackets
• You only start paying income tax once your chargeable income exceeds $20,000
• The rates start at 2% and go up to 24% for very high incomes

For more information on tax brackets, visit IRAS’ Individual Income Tax Rates webpage.

Meet IRAS

The Inland Revenue Authority of Singapore (IRAS) is the government agency that handles all tax matters. You’ll liaise with them when it’s time to file and pay your taxes. The annual income tax filing period for individuals in Singapore is from 1 March to 18 April. You’ll file your taxes via the myTax Portal on the IRAS website and, thankfully, it’s pretty user-friendly.

Tip! Make sure your contact details and notice preferences are updated to receive timely updates on your tax matters from IRAS.

Why it matters (even if you're not paying yet)

• You may still need to file: Even if you don’t expect to pay any tax, you are still required to file a tax return if you receive a notification to file from IRAS, or your annual income in the previous year exceeds a certain threshold. It takes less than a minute to check if you need to file on IRAS’ myTax Portal!
• Avoid last-minute panic: First-time filing is a new experience for everyone. It’s better to learn now than scramble later.
• Understand what are exempted: Some income (like scholarships, bank interest income or compulsory employer's CPF contributions) may not be taxable. Good to know what counts.
• Find out what you can claim: Know what tax deductions and tax reliefs you can claim to lower your taxable income and tax payable and maximise your tax savings!

Be connected with IRAS

Stay updated on the latest tax matters by following IRAS on Instagram, TikTok and Telegram for tips and updates in bite-sized, easy-to-understand formats.