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Key measures from the announcement include higher government support for wages, bigger rebates and CDC vouchers for eligible households, and a SkillsFuture – Workforce Singapore merger to create a one-stop hub for workers and employers.
Singapore’s Prime Minister and Minister for Finance, Lawrence Wong delivered the Budget 2026 statement in Parliament earlier today (Thursday, 12 February 2025), 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, he said, 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, and
- Renewing the Singapore spirit to help the nation thrive in a more contested world.
For employers and HR leaders, HRO has compiled some of the major announcements that are expected to impact manpower planning. Some of the several relevant measures include:
- 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.
Note: All currencies in this report refer to Singapore dollars (SGD).
Advancing a refreshed economic strategy
While Singapore’s economy performed strongly last year, some businesses continue to face cost pressures and operating challenges. To provide immediate support, the Government will introduce a 40% corporate income tax rebate for the Year of Assessment 2026.
Active companies that employed at least one local worker will receive a minimum benefit of $1,500, capped at $30,000 per firm, to ease short-term cash flow pressures.
A key plank of the strategy is to remain open and connected to global markets while building greater resilience. As such, 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.
To help companies capture overseas opportunities, support for internationalisation will be enhanced. Grant support will cover 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 to provide greater financing flexibility.
The Government will also strengthen Singapore’s capital markets and enterprise ecosystem. Measures will be introduced to make it easier for high-growth companies to go public, alongside plans to establish a dual listing bridge between the Singapore Exchange (SGX) and the Shenzhen Stock Exchange.
At the same time, the Economic Development Board will step up efforts to attract promising high-growth firms, in addition MNCs, for them to anchor and scale from Singapore.
Another focus is building leadership in key growth clusters by anchoring higher-value segments of global value chains in Singapore. This includes areas such as semiconductors, aerospace and biomedical sciences.
Technology and innovation will underpin these efforts. Under the Research, Innovation and Enterprise (RIE) 2030 plan, the Government will invest $37bn over the next five years — around 1% of GDP annually — in targeted R&D.
Funding will be focused on areas where Singapore has competitive strengths and long-term potential, including decarbonisation technologies and quantum computing.
Harnessing artificial intelligence as a strategic advantage
PM Wong stressed that artificial intelligence (AI) will be a central pillar of Singapore’s next phase of growth, as it has the potential to address structural constraints such as labour shortages and an ageing population.
Rather than competing to build the largest frontier models, Singapore should focus on deploying AI effectively, responsibly and at speed. The aim, he said, is to be a trusted hub where companies and researchers can develop, test and scale practical AI solutions.
To accelerate adoption at a national level, the Government will launch a new set of AI missions to drive transformation in four sectors: advanced manufacturing, connectivity and logistics, finance, and healthcare. These missions will be tied to clear outcomes, such as smarter factories, more automated operations, and improved service delivery.
To support innovation, regulations will be reviewed and regulatory sandboxes introduced to allow companies to test AI solutions safely. A new National AI Council, chaired by the Prime Minister, will provide overall direction and coordinate efforts across agencies.
Enterprise adoption will also be stepped up. A new “Champions of AI” programme will support firms seeking end-to-end AI transformation.
For the broader business community, the Enterprise Innovation Scheme will be expanded to include AI-related expenditure, with 400% tax deductions on qualifying costs capped at $50,000 per year of assessment for YA2027 and YA2028.
The Productivity Solutions Grant will also be enhanced to support more digital and AI-enabled tools, particularly for SMEs.
The Government has started a pilot called Lorong AI, a dedicated co-working space that serves as a convening hub for the AI community.
This will be built upon through a larger AI Park at one-north, to bring together founders, researchers and businesses to collaborate and commercialise solutions.
Measures will also be put in place to help workers adapt. The Government will work with unions and employers to support reskilling, job redesign and transitions into new roles.
Strengthening workforce resilience
PM Wong emphasised that Singaporeans, particularly workers, remain at the centre of the Government’s economic strategy. Thus, Budget 2026 introduces further measures to uplift lower-wage workers and encourage firms to invest in skills and productivity.
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 also be enhanced, with Government co-funding increased from 20% to 30% this year and extended for two more years until 2028.
From next year, the minimum wage increase required to qualify for support will be raised from $100 to $200, to better reward firms that provide meaningful pay increases.
Support for training and lifelong learning will also be strengthened. The Workfare Skills Support scheme will see higher hourly allowances for workers attending training, while SkillsFuture saw more than 600,000 individuals taking up courses last year.
To provide more seamless support across training and employment, SkillsFuture Singapore and Workforce Singapore will be merged into a new statutory board jointly overseen by the Ministries of Education and Manpower. The new agency will serve as a one-stop shop for skills upgrading, career guidance and job matching.
Targeted measures will also support specific worker groups. Under the SkillsFuture Level-Up Programme, mid-career workers aged 40 and above will continue to receive subsidies and training allowances, with the allowance extended to those pursuing part-time courses.
Senior workers will receive continued support through the extension of the Senior Employment Credit until end-2027.
Read our coverage on the extension of the Part-Time Re-employment Grant (PTRG) here.
PM Wong stressed that Singapore will remain open to global talent while ensuring a strong local core. 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.
S Pass qualifying salaries will also increase from $3,300 to $3,600, and from $3,800 to $4,000 for financial services. Adjustments will be phased in for renewals and accompanied by levy changes in selected sectors.
Read our coverage on Singapore's updates to the Complementarity Assessment Framework (COMPASS) framework here.
Support for families
Through the Forward Singapore agenda, the Government has strengthened help for parents, seniors, caregivers and persons with disabilities, while ramping up the supply of HDB flats to keep public housing accessible and affordable for couples and young families.
Budget 2026 builds on this momentum with further measures to give families greater assurance and confidence to start and raise a family.
To ease the cost of parenthood, a new Large Families Scheme will provide up to $16,000 in additional benefits for every third and subsequent child. Families will also receive another $500 in Child LifeSG credits for each Singaporean child aged 12 and below this year.
Preschool and student care will remain a priority. Means-tested preschool subsidies will be extended to more households, with the monthly income ceiling raised to $15,000 from next year, which is expected to benefit more than 60,000 families.
Eligible parents will also receive higher infant care and childcare subsidies. For student care, the fee assistance income threshold will be increased to $6,500 so more families can qualify.
Lower-income families will receive strengthened, family-centric support through ComLink+. Each household is paired with a dedicated family coach to set goals such as stable employment, home ownership and consistent preschool attendance. Families who meet these milestones receive additional payouts through Progress Packages.
These packages will be enhanced with a new quarterly payout of $500 for families who actively commit to their action plans, paired with higher rewards for achieving key goals, and a larger share of support disbursed in cash while continuing CPF top-ups.
A family with two preschool-aged children under ComLink+ can receive around $10,000 a year in combined cash and CPF support.
Support for people with disabilities
The Government is committed to providing more meaningful support for persons with disabilities, their families, and caregivers. A task force, led by Goh Pei Ming, Minister of State for Social and Family Development, is reviewing how support can be strengthened across different life stages.
Key areas under review include expanding capacity in community-based facilities, keeping services affordable, and helping graduates of special education schools secure meaningful employment and live independently in the community.
Strengthening CPF and retirement security
The Government will step up support for seniors to ensure they can age with dignity, security, and peace of mind. CareShield Life has been enhanced with higher payouts, and premium subsidies have been increased. An additional $400mn will be injected into the Long-Term Care Support Fund to cover these subsidies amid longer lifespans.
To strengthen retirement adequacy, 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 the Government providing a CPF Transition Offset to help employers manage half of the increase.
More voluntary investment options will also be offered to help members grow their retirement savings, including a new lifetime retirement investment scheme with low fees and a life-cycle approach to managing risk.
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. Eligible households will receive increased U-Save rebates for utilities, and all households will receive $500 in CDC vouchers in January 2027, usable at supermarkets and participating hawkers.
Safeguarding security and sustainability
With Singapore facing rising geopolitical tensions, cyber threats, and climate risks, defence spending will remain around 3% of GDP, with investments to counter drones, unmanned systems, and enhance cyber defenses across agencies and critical infrastructure.
Partnerships with private-sector companies will strengthen collective cybersecurity.
On the matter of sustainability, Singapore has raised the carbon tax to $45 per ton, with a trajectory of $50–$80 per ton by 2030, while supporting households and businesses through rebates, grants, and green loans.
The 2030 solar deployment target of 2 GWp (gigawatt-peak) has been reached ahead of schedule and is now raised to 3 GWp. Efforts to diversify energy sources include regional low-carbon imports, hydrogen, geothermal, and civilian nuclear energy. Transport decarbonisation continues with 100% cleaner vehicles by 2040, sustainable aviation fuel, and low-carbon shipping solutions.
Renewing the Singapore spirit
In an increasingly divided world, PM Wong stated the Government will invest in initiatives that strengthen social cohesion, nurture shared identity, and celebrate multiculturalism.
Arts and heritage remain central to this effort. The Malay Heritage Centre will open later this year, the Singapore Chinese Cultural Centre will expand its reach, and the Indian Heritage Centre, now celebrating its 10th anniversary, will receive further support to enhance programming.
In sports, new and upgraded facilities, including the Ponggol Regional Sports Centre, Toa Payoh integrated development, and revamped Hougang and Punggol centres, along with expanded dual-use schemes in schools, will make sports more accessible for all ages and abilities.
The “We First” spirit is to be further fostered through giving, volunteering, and everyday acts of kindness. Tax incentives for donations to Institutions of a Public Character (IPCs) have been extended until 2029, and the corporate volunteer scheme offering 450% tax deductions will also continue for another three years.
To strengthen sustained impact of ground-up initiatives, a new $50mn SG Partnership Fund will provide tiered funding, including up to $1mn for multi-year projects.
Youth engagement remains a priority, with upcoming youth panels providing young Singaporeans more avenues to contribute to nation-building and shape Singapore’s future.
Singapore’s fiscal position and outlook
- Strong fiscal management: Singapore maintains a robust fiscal position, ensuring revenues meet expenditures while supporting both current and future generations.
- Revenue performance: FY2025 is expected to see higher revenues due to better-than-expected economic performance and increased corporate income tax collections. In FY2024, corporate income tax contributed 4% of GDP, a significant rise from past years, and is projected to increase further in FY2025 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: FY2025 is expected to end with a surplus of $15.1bn (1.9% of GDP), while FY2026 is projected at $8.5bn (1% of GDP).
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 long-term sustainability goals.
- Balanced and resilient approach: Singapore’s strong fiscal position allows for meaningful investments without the constraints of debt pressures.
- Specific measures:
- Vehicle taxes: Electric vehicle path rebates will be reduced by 45 percentage points; preferential additional registration fee (PARF) rebate cap lowered from $60,000 to $30,000.
- Tobacco excise duty: Increased by 20% to encourage healthier choices.
- Base Erosion and Profit Shifting (BEPS) Pillar Two implementation: Expected to raise effective tax rates for large multinationals, boosting corporate tax collections from FY2027 onwards.
PM Wong ended his speech by affirming the spirit of active participation, which sees generations of citizens stepping forward and taking responsibility for the nation’s future; even as the youth are finding innovative ways to contribute to their communities, support the vulnerable, and create positive social impact.
In conclusion, he said: “Together, we will secure a stronger, fairer and brighter future for all.”
Lead image / Lawrence Wong YouTube
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