Key facts at a glance
Annual deduction cap
HK$60,000
Shared aggregate with QDAP premiums
Max tax saving
HK$10,200
At the 17% top progressive band
Lock-in
Age 65
Same withdrawal rules as mandatory MPF
Here is the answer before the mechanics: Tax Deductible Voluntary Contributions (TVC) let you put extra money into MPF, on top of your mandatory 5%, and deduct up to HK$60,000 a year from your assessable income for Salaries Tax. That HK$60,000 cap is shared with Qualifying Deferred Annuity Policy (QDAP) premiums, so the two don't stack into separate allowances. Depending on your marginal tax rate, maxing it out can be worth up to HK$10,200 in tax saved.
This is a genuinely different mechanism from the mandatory 5% MPF deduction that comes automatically out of every payslip, TVC is optional, self-directed, and paid directly to a trustee rather than through your employer. It's also a completely separate topic from the MPF offsetting abolition affecting severance and long service payments, TVC is about your own retirement saving and tax bill, not an employer's exit-cost obligations.
See your exact Salaries Tax bill, with or without TVC.
Open the Hong Kong calculatorHow the deduction actually reduces your tax bill
TVC contributions are deducted from your assessable income before the progressive Salaries Tax bands (2%/6%/10%/14%/17%) are applied, on top of the mandatory MPF deduction and the basic allowance, up to the HK$60,000 annual cap. Because it reduces income taxed at your marginal rate, the value of the deduction depends entirely on which progressive band that income would otherwise have fallen into.
One important nuance: TVC only helps if the progressive method is what you're actually being charged. Hong Kong charges Salaries Tax under whichever of the progressive or standard rate calculation is lower, and TVC has no effect on the standard rate calculation at all (standard rate applies to net income before any allowance-style deductions like TVC). If you're a high earner already on the standard rate, contributing to TVC won't reduce your tax bill, since the lower of the two methods is applied regardless.
If TVC and QDAP premiums are both paid in the same year, IRD applies the combined HK$60,000 cap to TVC contributions first, with any remaining room going to QDAP premiums. Understanding which combination fits your situation matters if you're using both products.
Tax saved at different contribution levels and tax bands
Worked examples assuming the progressive method applies (TVC has no effect under the standard rate method):
| TVC contribution | Marginal band | Tax saved |
|---|---|---|
| HK$20,000 | progressive 2% band | HK$400 |
| HK$60,000 | progressive 14% band | HK$8,400 |
| HK$60,000 | progressive 17% top band | HK$10,200 |
The full HK$60,000 contribution at the top 17% band saves HK$10,200, the largest possible TVC tax saving in a single year. See how the progressive bands stack on your own salary on the Hong Kong Salary Calculator.
Your money is locked until 65
TVC contributions, whether the tax-deductible portion or not, follow the same withdrawal rules as mandatory MPF: generally locked until age 65, with limited early-withdrawal grounds such as permanent departure from Hong Kong, terminal illness, or total incapacity. Don't contribute more than you can genuinely afford to lock away in exchange for the annual tax deduction, this is a retirement product first and a tax shelter second.
TVC is separate from your mandatory 5% deduction
It's easy to conflate the two: your mandatory MPF contribution is 5% of relevant income, automatically deducted by your employer, capped at HK$1,500/month, and already reflected in your take-home pay. TVC is a voluntary top-up you arrange yourself, paid directly to a trustee, with its own separate HK$60,000 annual tax-deduction cap. See our full breakdown of the mandatory side in our MPF explained guide.
See your Salaries Tax and MPF together
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Frequently asked questions
What is TVC and how is it different from the mandatory 5% MPF contribution?
TVC stands for Tax Deductible Voluntary Contributions. Your mandatory 5% MPF contribution is deducted automatically from your pay by your employer and is capped at HK$1,500/month, it is NOT what this article is about. TVC is a completely separate, optional contribution you make yourself, by direct payment to an MPFA-approved trustee's dedicated TVC account, not through your employer's payroll scheme. Only TVC (not ordinary voluntary contributions through your employer's scheme) qualifies for the Salaries Tax deduction covered here.
How much can I deduct from my Salaries Tax with TVC?
Up to HK$60,000 per year of assessment. This is an aggregate cap shared with Qualifying Deferred Annuity Policy (QDAP) premiums, so if you contribute HK$40,000 to TVC and pay HK$30,000 in QDAP premiums in the same year, only HK$60,000 total is deductible, not HK$70,000. If you make both, IRD applies the deduction to your TVC first, then whatever's left of the HK$60,000 cap to QDAP.
How much tax do I actually save by contributing to TVC?
It depends on your marginal Salaries Tax rate under the progressive method: 2%, 6%, 10%, 14%, or 17%. Contributing the full HK$60,000 at the top 17% progressive band saves HK$10,200 in tax; at the 2% band it only saves HK$1,200. TVC is most valuable for higher earners paying tax at the higher progressive bands, and has no benefit if your tax bill under the standard rate method is already the lower of the two (since TVC reduces net income before allowance, which only affects the progressive calculation).
Can I withdraw my TVC contributions early if I need the money?
Generally no. Like mandatory MPF, TVC contributions (whether the tax-deductible portion or not) are locked until age 65, with the same limited early-withdrawal grounds as ordinary MPF, such as permanent departure from Hong Kong, terminal illness, or total incapacity. Don't treat TVC as a flexible savings account, it's a long-term retirement lock-in in exchange for the annual tax deduction.
Do I need to set up TVC through my employer?
No. TVC is entirely self-directed: you open a TVC account with an MPFA-approved trustee (often, but not required to be, the same trustee as your employer's mandatory scheme) and contribute by direct payment yourself. It has no effect on your employer's payroll or their mandatory contribution obligations. You claim the deduction yourself when filing your Salaries Tax return, keeping the trustee's contribution receipts as evidence.
What's a Qualifying Deferred Annuity Policy (QDAP) and why is it mentioned alongside TVC?
QDAP is a separate, IRD-recognised category of deferred annuity product from insurers, also eligible for a Salaries Tax deduction, but sharing the same HK$60,000 annual cap with TVC rather than getting its own separate allowance. Some taxpayers split contributions between TVC and QDAP for diversification, but the combined deduction never exceeds HK$60,000 regardless of the split.
Should I max out TVC before or after mandatory MPF contributions?
TVC is on top of, not instead of, your mandatory 5% contribution, you can't redirect mandatory contributions into TVC. Whether it's worth maxing out HK$60,000 in TVC depends on your marginal tax rate, how much you value the guaranteed deduction against the retirement lock-in, and whether you're already using the standard rate method (where TVC provides no benefit since it doesn't apply to that calculation).
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