Revision of Earned Income Relief

Assoc Prof Jamus Jerome Lim asked the Prime Minister and Minister for Finance (a) whether the earned income relief of $1,000 has ever been revised historically; and (b) whether the Government will consider increasing this cap, given high inflation over the post-pandemic period.

The Government regularly reviews the personal income tax system so that it remains progressive, keeping the overall tax burden low for middle- and lower-income earners.

The earned income relief has been enhanced over the years. In addition to the base tier of $1,000, we have introduced higher relief tiers ranging from $4,000 to $12,000 for older workers and persons with disabilities.

The earned income relief should also be seen together with other tax reliefs and exemptions, such as the personal income tax exemption threshold of $20,000.

Taken together, one in three resident workers do not pay any personal income tax today. Among those who do, about eight in 10 have an effective tax rate of less than 6%.