Singapore Budget 2026: Key Highlights for HR Leaders, Employers, and Employees

Why It Matters

These policies raise labour costs, incentivise upskilling, and enhance Singapore’s appeal as a talent hub, directly affecting HR strategy and corporate budgeting. The fiscal incentives and AI support aim to sustain productivity amid slower macro growth.

Key Takeaways

• EP minimum salary rises to $6,000 (2027)
• Progressive Wage Credit co‑funding jumps to 30%
• SkillsFuture and Workforce merge into single board
• CPF top‑ups up to $1,500 for seniors
• 400% AI tax deduction for qualifying expenses

Pulse Analysis

Singapore’s 2026 Budget arrives at a time of heightened global uncertainty, yet the nation’s fiscal fundamentals remain strong, with a projected FY 2026 surplus of $8.5 bn. The government’s macro‑policy mix—combining a 40% corporate‑income‑tax rebate, expanded internationalisation grants, and a focus on AI‑driven sectors—signals a deliberate pivot toward high‑value growth. By deepening ties with emerging markets and investing $37 bn in R&D under the RIE 2030 plan, Singapore aims to offset the anticipated slowdown to 2‑4% and preserve its status as a regional innovation hub.

For HR leaders and employers, the budget introduces several cost‑and‑talent‑management shifts. The minimum qualifying salary for new Employment Passes climbs to $6,000 (and $6,600 for financial services) from 2027, tightening the talent pipeline and prompting firms to reassess compensation structures. The Progressive Wage Credit Scheme’s co‑funding rises to 30%, while the minimum wage threshold for eligibility doubles, providing stronger support for lower‑paid workers. A merged SkillsFuture‑Workforce board creates a one‑stop platform for upskilling, and the CPF Transition Offset helps absorb the planned senior‑worker contribution increase, cushioning payroll impacts.

Beyond payroll, the budget’s AI incentives reshape productivity strategies. Companies can claim up to 400% tax deductions on AI‑related spend, and the Enterprise Innovation Scheme now includes AI projects, encouraging rapid digital transformation. Coupled with the new National AI Council and sandbox environments, firms have clearer pathways to experiment and scale AI solutions. Together, these measures aim to boost workforce resilience, attract high‑growth enterprises, and sustain Singapore’s competitive edge in a contested global landscape.

Singapore Budget 2026: Key highlights for HR leaders, employers, and employees

Thursday, 12 February 2025

Singapore’s Prime Minister and Minister for Finance, Lawrence Wong, delivered the Budget 2026 statement in Parliament, setting out the Government’s financial policy for the year ahead against a backdrop of mounting global uncertainty and geopolitical strain.

Marking the first Budget of a post‑SG60 phase, PM Wong warned that the global environment has grown more fragmented and unpredictable, with weakening multilateral cooperation, rising geopolitical tensions, and economic volatility reshaping the rules that once underpinned stability and growth.

While the world economy showed unexpected resilience last year, helping Singapore achieve stronger‑than‑forecast growth of 5 %, he cautioned that such tailwinds may not last. Slowing trade, rising public debt, and financial‑market risks are clouding the outlook, with growth expected to moderate to 2‑4 % in 2026.

Against this backdrop, PM Wong stressed that Singapore cannot afford to stand still and must proactively refresh its strategies to remain competitive.

Budget 2026 will lay the groundwork for the next phase of development, with focus on:

• Advancing a refreshed economic strategy

• Harnessing artificial intelligence as a strategic advantage

• Strengthening workforce resilience

• Providing greater support for families

• Safeguarding security and sustainability

• Renewing the Singapore spirit to help the nation thrive in a more contested world

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Key announcements relevant to employers and HR leaders

• From January 2027, the minimum qualifying salary for new Employment Pass applicants will be raised from $5,600 to $6,000, and from $6,200 to $6,600 in the financial‑services sector.

• SkillsFuture Singapore and Workforce Singapore will be merged into a new statutory board jointly overseen by the Ministries of Education and Manpower.

• The Progressive Wage Credit Scheme will be enhanced, with Government co‑funding increased from 20 % to 30 % this year and extended for two more years until 2028.

• Eligible households will receive increased U‑Save rebates for utilities, and all households will receive $500 in CDC vouchers in January 2027.

• Singaporeans aged 50 and above with CPF balances below the Basic Retirement Sum will receive top‑ups of up to $1,500. Planned CPF contribution‑rate increases for senior workers will also proceed in 2027, with the Government providing a CPF Transition Offset to help employers manage half of the increase.

All currencies are Singapore dollars (SGD).

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Advancing a refreshed economic strategy

• A 40 % corporate‑income‑tax rebate for Year of Assessment 2026 will be introduced. Active companies that employed at least one local worker will receive a minimum benefit of $1,500, capped at $30,000 per firm.

• Singapore will step up engagement with fast‑growing markets in Latin America, Africa and the Middle East, while deepening regional integration through projects such as the Johor‑Singapore Special Economic Zone and Indonesia’s Batam, Bintan and Karimun free‑trade zones.

• Grant support for internationalisation will be enhanced: up to 70 % of costs for SMEs and up to 50 % for non‑SMEs. The Market Readiness Assistance grant will be expanded to support both entry into new markets and deeper presence in existing ones.

• The cap for automatic claims under the Double Tax Deduction for Internationalisation scheme will be raised from $150,000 to $400,000, and loan limits under the Enterprise Financing Scheme will be increased.

• Measures will be introduced to make it easier for high‑growth companies to go public, including a dual‑listing bridge between the Singapore Exchange (SGX) and the Shenzhen Stock Exchange.

• The Economic Development Board will step up efforts to attract promising high‑growth firms and MNCs to anchor and scale from Singapore.

• Building leadership in key growth clusters – semiconductors, aerospace and biomedical sciences – will be a priority.

• Under the Research, Innovation and Enterprise (RIE) 2030 plan, the Government will invest $37 bn over the next five years (around 1 % of GDP annually) in targeted R&D, focusing on decarbonisation technologies and quantum computing.

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Harnessing artificial intelligence as a strategic advantage

• AI will be a central pillar of Singapore’s next phase of growth. The Government will launch AI missions in four sectors – advanced manufacturing, connectivity & logistics, finance, and healthcare – with clear outcomes such as smarter factories and improved service delivery.

• Regulations will be reviewed and regulatory sandboxes introduced to allow safe testing of AI solutions. A new National AI Council, chaired by the Prime Minister, will provide overall direction and coordinate agency efforts.

• The “Champions of AI” programme will support firms seeking end‑to‑end AI transformation.

• The Enterprise Innovation Scheme will be expanded to include AI‑related expenditure, offering 400 % tax deductions on qualifying costs (capped at $50,000 per year of assessment for YA 2027 and YA 2028).

• The Productivity Solutions Grant will be enhanced to support more digital and AI‑enabled tools, particularly for SMEs.

• A pilot called Lorong AI – a co‑working space for the AI community – will be built upon through a larger AI Park at one‑north.

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Strengthening workforce resilience

• The Local Qualifying Salary will be raised from $1,600 to $1,800 for full‑time local employees in firms that hire foreign workers.

• The Progressive Wage Credit Scheme will be enhanced (government co‑funding 30 %).

• The minimum wage increase required to qualify for support will be raised from $100 to $200.

• The Workfare Skills Support scheme will see higher hourly allowances for workers attending training.

• SkillsFuture Singapore and Workforce Singapore will merge into a new statutory board serving as a one‑stop shop for skills upgrading, career guidance and job matching.

• The SkillsFuture Level‑Up Programme will continue to subsidise mid‑career workers (aged 40 and above) and extend allowances to part‑time courses.

• The Senior Employment Credit will be extended until end‑2027.

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Support for families

• A new Large Families Scheme will provide up to $16,000 in additional benefits for every third and subsequent child.

• Families will receive an extra $500 in Child LifeSG credits for each Singaporean child aged 12 and below.

• Means‑tested preschool subsidies will be extended, with the monthly income ceiling raised to $15,000, benefiting over 60,000 families.

• Higher infant‑care and childcare subsidies will be introduced, and the fee‑assistance income threshold for student care will be increased to $6,500.

• ComLink+ will pair each low‑income household with a dedicated family coach and provide quarterly payouts of $500 for families that meet action‑plan milestones, alongside larger cash and CPF top‑ups.

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Support for people with disabilities

• A task force led by Goh Pei Ming, Minister of State for Social and Family Development, will review and strengthen support across life stages, including expanding community‑based facilities, keeping services affordable, and helping special‑education graduates secure meaningful employment.

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Strengthening CPF and retirement security

• CareShield Life will be enhanced with higher payouts and increased premium subsidies. An additional $400 mn will be injected into the Long‑Term Care Support Fund.

• Singaporeans aged 50 and above with CPF balances below the Basic Retirement Sum will receive top‑ups of up to $1,500.

• Planned CPF contribution‑rate increases for senior workers will proceed in 2027, with a CPF Transition Offset to help employers manage half of the increase.

• New voluntary investment options, including a lifetime retirement investment scheme with low fees and a life‑cycle risk‑management approach, will be offered.

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Easing inflationary pressures for citizens

• Singaporean adults earning up to $100,000 with no more than one property will receive a Cost‑of‑Living Special Payment of $200–$400.

• All households will receive $500 in CDC vouchers in January 2027, usable at supermarkets and participating hawkers.

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Safeguarding security and sustainability

• Defence spending will remain around 3 % of GDP, with investments in counter‑drone systems, unmanned platforms and enhanced cyber defences.

• Partnerships with the private sector will strengthen collective cybersecurity.

• The carbon tax will be raised to $45 per ton, with a trajectory of $50–$80 per ton by 2030.

• The 2030 solar deployment target of 2 GWp has been reached ahead of schedule and is now raised to 3 GWp.

• Energy diversification will include regional low‑carbon imports, hydrogen, geothermal and civilian nuclear energy.

• Transport decarbonisation aims for 100 % cleaner vehicles by 2040, alongside sustainable aviation fuel and low‑carbon shipping solutions.

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Renewing the Singapore spirit

• Arts and heritage initiatives will be expanded, including the Malay Heritage Centre, Singapore Chinese Cultural Centre and Indian Heritage Centre.

• New and upgraded sports facilities (e.g., Ponggol Regional Sports Centre, Toa Payoh integrated development) will increase accessibility.

• Tax incentives for donations to Institutions of a Public Character (IPCs) will be extended until 2029, and the corporate volunteer scheme will continue with 450 % tax deductions for another three years.

• A $50 mn SG Partnership Fund will provide tiered funding (up to $1 mn for multi‑year projects).

• Youth engagement will be bolstered through upcoming panels and avenues for contribution to nation‑building.

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Singapore’s fiscal position and outlook

• Strong fiscal management: Singapore maintains a robust fiscal position, ensuring revenues meet expenditures while supporting current and future generations.

• Revenue performance: FY 2025 is expected to see higher revenues due to better‑than‑expected economic performance and increased corporate income tax collections. In FY 2024, corporate income tax contributed 4 % of GDP, a significant rise from past years, and is projected to increase further in FY 2025 and beyond.

• Asset‑related revenue: Strong demand for private vehicles and properties has led to higher collections from vehicle‑quota premiums and property‑related sources.

• Surplus projections: FY 2025 is expected to end with a surplus of $15.1 bn (1.9 % of GDP), while FY 2026 is projected at $8.5 bn (1 % of GDP).

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Major investments and spending priorities

• External relations and security: Expanding overseas partnerships and building capabilities to address emerging threats.

• Economic competitiveness: Updating investment‑promotion tools to attract high‑value investments.

• Social needs: Healthcare, family support, social mobility and retirement adequacy.

• Future preparedness: Funding critical infrastructure, energy transition, coastal protection and long‑term economic strategies.

• Top‑ups and policy adjustments: Additional allocations to support major infrastructure projects, economic strategies and sustainability goals.

• Specific measures:

  • Vehicle taxes: EV path rebates reduced by 45 percentage points; PARF rebate cap lowered from $60,000 to $30,000.

  • Tobacco excise duty: Increased by 20 % to encourage healthier choices.

  • BEPS Pillar Two implementation: Expected to raise effective tax rates for large multinationals, boosting corporate tax collections from FY 2027 onwards.

PM Wong concluded his speech by affirming the spirit of active participation, urging citizens of all ages to step forward and take responsibility for the nation’s future.

“Together, we will secure a stronger, fairer and brighter future for all.”