Higher Income Tax Payments following Change from Percentage-based to Fixed-dollar Working Mother's Child Relief
Ministry of FinanceSpeakers
Summary
This question concerns the transition of the Working Mother’s Child Relief (WMCR) to a fixed-dollar basis and its subsequent impact on income tax payments and revenue. Mr Kenneth Tiong Boon Kiat inquired about the number of affected mothers in Year of Assessment 2025 and whether the projected tax revenue aligns with pro-fertility objectives. Minister in the Prime Minister’s Office and Second Minister for Finance Indranee Rajah stated that 9,500 mothers paid higher taxes, explaining that the change ensures equal support across income levels to improve policy progressivity. She noted that while ten-year revenue projections are unavailable due to income variables, the cost of overall parenthood initiatives is expected to reach $7 billion in Financial Year 2026. The Minister emphasized that the total government expenditure on marriage and parenthood support far exceeds any additional tax revenue generated from the WMCR adjustment.
Transcript
33 Mr Kenneth Tiong Boon Kiat asked the Prime Minister and Minister for Finance (a) based on the Year of Assessment (YA) 2025 data, how many working mothers with children born from 2024 paid higher income tax following change from percentage-based to fixed-dollar Working Mother's Child Relief; (b) what is the projected additional tax revenue over the next decade as the affected cohort grows; and (c) whether this projected revenue is consistent with the objective of encouraging higher-order births.
Ms Indranee Rajah: The Working Mother's Child Relief (WMCR) is part of a broader package to support Singaporeans in their marriage and parenthood journey. We have over the years significantly increased financial support, such as the Baby Bonus Cash Gift and the Child Development Account First Step Grant, and enhanced parental leave provisions. We also introduced the new Shared Parental Leave scheme and the Large Families Scheme last year. All in, we expect these initiatives to cost the Government close to $7 billion in Financial Year (FY) 2026, up from over $4 billion in FY2020.
About 9,500 working mothers paid higher income tax in Year of Assessment 2025 than they would have under the old WMCR basis. The change in basis of the WMCR to a fixed dollar relief was to provide equal support for children of the same child order regardless of the mother's income, which improves the progressivity of our support. We are unable to project the additional tax revenue from the WMCR change over the next 10 years, as this is dependent on many variables that could change over time, such as the working mother's income, the other qualifying reliefs and number of children she may eventually have.
However, we expect the cost of the marriage and parenthood initiatives to far exceed any additional tax revenue from the WMCR change.