Taxpayers will get a one-off rebate of 20 per cent of tax payable for the 2017 Year of Assessment but the handout will be capped at $500.
The rebate, which applies to income earned in the 12 months to Dec 31 last year, will cost the Government $385 million.
Taxpayers with a chargeable income of $67,856 - with tax payable of $2,500 - will get the maximum rebate of $500. Anyone with assessable incomes above $67,856 will be restricted to the same amount.
Mr Panneer Selvam, partner with the people advisory services at Ernst & Young Solutions, said the rebate will benefit those earning more than $42,500, who comprise about 70 per cent of all taxpayers.
He worked out this income level based on certain assumptions, such as a taxpayer with two dependent children and a non-working wife.
This is in line with the Government's position that more should be done to help the lower-income earners rather than those who can better afford to pay taxes.
MS SABRINA SIA, tax partner at Deloitte Singapore, on the tax rebate cap.
"The tax rebate of 20 per cent, capped at $500, will benefit a taxpayer who earns more than $42,500 (that is, monthly income of $3,270, including a 13th month annual wage supplement)," he said. This is because the chargeable income after deducting personal reliefs is likely to be $20,000, which attracts zero tax.
Ms Sabrina Sia, tax partner at Deloitte Singapore, said: "Due to the cap, the rebate is expected to benefit the lower and middle-income groups more than the higher- income earners. This is in line with the Government's position that more should be done to help the lower-income earners rather than those who can better afford to pay taxes."
KPMG Singapore's head of personal tax and global mobility services BJ Ooi noted that the $500 cap is lower than in past budgets, when the limits have ranged from $1,000 to $2,000.
"I was hoping the Government would give more. Still, it is welcome news for many," he said.
Tax rates move up progressively. Those with a chargeable income above $320,000 pay 22 per cent.