The tax system will be more progressive under a new measure that caps the amount of personal income tax relief an individual can claim.
The limit will be set at $80,000 from Year of Assessment 2018, and is expected to raise an additional tax revenue of $100 million a year.
It is estimated that 99 per cent of tax-resident individuals will not be affected, which means many can still continue to claim reliefs.
Around 90 per cent of women claiming the Working Mother's Child Relief (WMCR) are expected to continue to claim it fully, without being affected by the cap, the Ministry of Finance said.
Tax experts said the cap will mainly affect working mothers who are higher wage earners with two children.
Mr Girish Naik, director of global mobility at PwC International Assignment Services, is concerned that the tax change, which will affect higher earners, will also penalise working mothers and some lower-income taxpayers.
Ms Wu Soo Mee, partner at Ernst & Young Solutions, worked out that working mothers earning more than $152,000 a year with two children and with total reliefs capped at $80,000 will pay more income tax.
Mr B.J. Ooi, partner and head of global mobility services at KPMG Singapore, said: "Coupled with the higher top marginal rate of 22 per cent, it appears that certain groups of individual taxpayers would be paying more taxes."
Deloitte Singapore said the cap appears to contradict the Government's effort to encourage procreation. "Typically it is the female individual taxpayers with Singapore citizen children who are able to enjoy personal tax reliefs that may be in excess of $80,000, as they get to enjoy WMCR with a cap of $50,000 on each qualifying child," said Ms Jill Lim, global employer services leader at Deloitte Singapore.
"However, with this cap, this seems to send a message that such high-income earning females are not encouraged to have more children, or should not return to the workforce after they have children."
Taxpayers who care for parents, grandparents and disabled family members could also be affected.
PwC's senior manager Mark Amatya said: "As some of the most generous tax reliefs are currently aimed at those with children, those who care for parents/grandparents/disabled family members, or those who plan for their own retirement, capping the value of tax reliefs may run counter to the objective of creating a more caring Singapore, and preparing for our older age."
There are 15 personal income tax reliefs. The amount of WMCR that a working mother can claim for each child is based on the child order: The WMCR for the first child is 15 per cent of the mother's income, 20 per cent for the second child and 25 per cent for each subsequent child. The cumulative WMCR for all children is capped at 100 per cent of the mother's earned income.
Finance Minister Heng Swee Keat said this cap "will make our personal income tax system more progressive". "Nevertheless, our personal income tax burden remains low. Our personal income tax structure must allow us to continue to stay competitive."
Mr Naik suggested that perhaps the WMCR could have been exempted from the cap so qualifying taxpayers may continue to enjoy the full incentive to return to work.