The BHS just moved. Here is why you do not need to panic.
Every year the Basic Healthcare Sum increases, and every year the same question floods my Telegram group. The BHS rises from $75,500 to $79,000 in 2026 - a 4.6% increment, or $3,500. On 1 January, if your Medisave Account has already hit this year's BHS of $75,500, you will see roughly $3,000 in interest credited overnight (4% on $75,500). Your balance will show around $78,500 - and the new BHS is $79,000. That $500 gap looks tiny. People panic.
Do not. That $3,000 of interest does not sit in your Medisave Account permanently. It overflows. If your Special Account has not reached the Full Retirement Sum of $220,400, it flows there first. If your SA has already hit FRS - as mine has since 2022 - it flows to your Ordinary Account instead. Either way, it leaves your MA. Your Medisave balance eventually settles back to the 2025 BHS of $75,500, opening up the full $3,500 gap for your 2026 VCMA contribution.
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Join Telegram โVCMA timing: do it early in January, especially if you have a December bonus
If you are in full-time employment, this is the most important practical note. Your employer's CPF contributions for December salaries and bonuses are typically credited by mid-January. Once that happens, your Medisave may hit or exceed the new BHS of $79,000, and your VCMA window closes for the year.
So do your Voluntary Contribution to Medisave as early as possible in January - before your employer contributions land. The window is short, especially for those with high bonuses or commissions in December. Once you have done it once, the playbook repeats every year and it becomes second nature.
VCMA is not just a 1 January opportunity
This is the part most people miss. Every time a deduction is made from your Medisave - MediShield Life premium, CareShield Life premium, Integrated Shield Plan premiums - your MA balance drops below the BHS. Each deduction reopens a VCMA window. These are legitimate, repeating tax optimisation opportunities throughout the year.
The highest-income earner in the household should be using their Medisave to pay for family members' Integrated Shield Plan premiums. Then top up via VCMA to reclaim the gap. The annual VCMA tax relief cap is $8,000 per individual. Stack it properly and you are reducing taxable income in a way that is completely government-backed and guaranteed.
My personal 2026 CPF strategy is different this year
In 2025, I only did a partial VCMA of around $4,000 to $5,000. My tax optimisation was already maxed out given my income that year, so there was no further benefit from topping up more. But 2026 is different for one specific reason: my company enters its fourth year of operation, which means the three-year startup tax exemption has ended.
New startup companies in Singapore enjoy a very attractive effective tax rate of approximately 4.25% on the first $100,000 of net income for their first three years. From year four, that exemption steps down to a partial one. This changes my salary structure. To optimise both corporate and personal tax simultaneously, I will be paying myself a higher salary in 2026 - which means higher CPF contributions, a wider tax bracket, and more room to use VCMA for relief.
๐ข SoloBizSG - If you are self-employed or thinking of incorporating, this is exactly the kind of tax decision we walk through. There is a free preview.
Explore SoloBizSG โThe $8,000 monthly salary ceiling change matters if you are a business owner
From 1 Jan 2026, the CPF monthly salary ceiling increases to $8,000. This means that up to $8,000 of monthly salary is now subject to full CPF contributions - both the employee and employer portions. For business owners who control their own salary, it creates a new lever for CPF-based tax planning. The annual salary ceiling of $102,000 remains unchanged.
CPF as a foundation, not a ceiling
Some of you may wonder why I spend so much time on CPF when I also invest in markets. The answer is straightforward: tax savings are guaranteed. Investment returns are not. CPF optimisation - done correctly - gives you a guaranteed, risk-free return via interest rates and tax relief. My investment portfolio outside CPF is in broad-market diversified index funds through Interactive Brokers, which I use for low FX rates and wide market access. CPF handles the foundation. The portfolio handles the growth.
I also want to be clear: CPF strategy is not one-size-fits-all. Not everyone values the same things. But you cannot make an informed decision to opt out of something you do not understand. That is why I do this video every year - for every new batch of Singaporeans hitting the BHS for the first time, or crossing the FRS, or changing employment status. Once you go through the exercise once, you will know exactly what to expect next year.