Navigating the world of taxes can feel overwhelming, especially when you're unsure of what you can legally deduct to ease your tax burden. In Singapore, tax deductions play a crucial role in helping individuals and the self-employed reduce their chargeable income — and ultimately, pay less tax.

Whether you're a salaried employee, self-employed, or simply filing your personal income tax return, understanding tax deductions in Singapore is key to optimising your financial well-being. This guide will cover everything you need to know — from general deductions and employment expenses to reliefs, rebates, and how to stay compliant with IRAS.

What is a Tax Deduction?

A tax deduction reduces your chargeable income, which is the portion of your total income subject to tax. The lower your chargeable income, the less income tax you will need to pay.

It’s important to differentiate between tax deductions, reliefs, and rebates:

• Tax deductions: Reduce your chargeable income. These include employment expenses and allowable business deductions for self-employed persons.
• Tax reliefs: Specific allowances granted to individual taxpayers based on personal circumstances (e.g., CPF contributions, parent relief).
• Tax rebates: Offset the amount of tax payable (e.g., personal income tax rebate for certain years).

All are crucial in reducing your tax liability, but they operate differently.

Who is Eligible for Tax Deductions in Singapore?

Broadly, anyone who earns income in Singapore and files a personal income tax return can claim tax deductions. This includes:

• Employees (salaried workers)
• Self-employed individuals
• Sole proprietors
• Partners in a partnership

However, the type of deductions you can claim will vary depending on your employment status and income type.

Common Types of Tax Deductions in Singapore

Here’s a breakdown of some of the most common tax deductions you can claim:

1. Employment Expenses

If you’re a salaried employee, you may claim tax deductions for out-of-pocket expenses incurred while performing your job. These must be:

• Incurred wholly and exclusively in earning your income,
• Not reimbursed by your employer,
• Not of a capital nature (e.g., buying a car),
• Supported with documentation (e.g., receipts, invoices).

Examples of allowable employment expenses include:

• Travelling expenses (excluding private car use)
• Entertainment expenses for business clients
• Subscriptions to professional bodies related to your job
• Tools or equipment purchases used for work

You’ll need to submit a detailed Statement of Claim when filing your taxes. You can refer to IRAS’s guidelines on employment expenses for a full list.

2. Tax Reliefs

While technically not deductions, tax reliefs are crucial in reducing your chargeable income. Here are some of the most common reliefs:

Please refer the full list and conditions available at IRAS - Tax Reliefs

3. Personal Income Tax Rebate

Personal Income Tax rebate will be granted to all tax resident individuals for the Year of Assessment 2025 (i.e. for income earned in 2024). The rebate will be 60% of tax payable, capped at $200 per taxpayer to help with the rising cost of living.

The tax rebate is calculated based on the following:

1. The amount of tax payable after double taxation relief and other credits; and
2. The amount of tax payable before offsetting the Parenthood Tax Rebate.

You do not need to apply for this rebate. IRAS will compute and grant the rebate automatically to all tax residents.

More info on the rebate can be found here.

4. Self-Employed and Partnership Deductions

If you are self-employed or in a partnership, the rules differ. You’re allowed to deduct business expenses that are:

• Wholly and exclusively incurred in the production of income,
• Revenue, not capital, in nature,
• Supported by records.

Common deductible business expenses include:

• Rent for office or business premises
• Utility bills
• Staff salaries and CPF contributions
• Advertising and marketing expenses
• Depreciation of fixed assets (via capital allowances)
• Professional fees (e.g., accounting services)

You can use the Pre-filled Profit and Loss Statement in myTax Portal or prepare your own.

Find out more the detailed guidelines on IRAS Self-Employed & Partnerships Guide

Non-Deductible Expenses

Some expenses are explicitly not deductible. These include:

• Personal living expenses (e.g., groceries, home rent)
• Fines or penalties
• Commuting from home to work (private car)
• Capital expenditures (unless capital allowances apply)
• Private entertainment or leisure costs

Staying informed on what’s not deductible helps avoid tax filing errors and IRAS audits.

Tax Deduction Limits and Caps

Singapore imposes an overall personal income tax relief cap of $80,000 per Year of Assessment. This includes the total of all tax reliefs you claim.

So, even if you qualify for multiple reliefs, your total deduction from chargeable income cannot exceed $80,000.

This cap is designed to maintain the equity and progressiveness of the tax system.

How to Claim Tax Deductions

Step 1: Organise your documentation

• Keep all receipts, invoices, and proof of payments.
• Maintain records for at least five years.

Step 2: File your tax return

• Use IRAS’ myTax Portal to file online.
• Declare all income sources accurately.
• Claim eligible deductions and reliefs under the respective sections.

Step 3: Submit supporting documents (if required)

• IRAS may request additional documentation after submission.
• Always respond promptly to avoid penalties.

Practical Tax Deduction Strategies

Here are a few practical tips to optimise your tax deductions in Singapore:

1. Plan early: Keep track of deductible expenses throughout the year.
2. Maximise CPF top-ups: Voluntary top-ups to CPF can provide tax relief (up to $8,000 for yourself, $8,000 for family).
3. Take eligible courses: Skill upgrading that’s related to your job may qualify for Course Fees Relief.
4. Support dependants: If you care for elderly parents or handicapped family members, you may qualify for additional reliefs.
5. Review every year: Income, reliefs, and policies may change annually — stay updated.

When Tax Deduction Processing via Payroll Software Makes Sense

Here are scenarios where using payroll software is essential and beneficial:

1. Employer CPF Deductions

Software ensures correct contribution rates based on salary ceilings, age group, and income type — which affects tax-relievable CPF amounts.

2. Voluntary Deductions

If your company allows staff to make voluntary CPF top-ups or donations via payroll, software can track and report them for end-of-year declaration.

3. Itemised Payslip Compliance

Tax-deductible elements like donations or union fees are transparently reflected in the employee’s itemised payslip, satisfying MOM regulations.

4. Reporting for IR8A/Auto-Inclusion

Good payroll systems support Auto-Inclusion Scheme (AIS), submitting employee income and deductions directly to IRAS — a must for accurate tax reliefs and assessment.

Keep yourself updated about Singapore Tax Deduction!

Understanding tax deduction in Singapore is not just about reducing your tax bill — it’s about staying compliant, being financially savvy, and planning your future with intention. With the right knowledge, you can make the most of the schemes available, whether you’re employed, self-employed, or in a partnership. Always refer to the official IRAS website and consult a tax advisor if your situation is complex.

While payroll software streamlines much of the monthly deduction process, you still need to manually claim personal tax reliefs and rebates during tax season via IRAS. That said, having a solid payroll system ensures your income and deductions are well-documented — making the filing process faster and less error-prone.

If you're looking to simplify your payroll and tax deduction processes in Singapore, Gutsy's payroll solution is designed to be IRAS-compliant and MOM-approved — saving you time while ensuring accuracy.