Adding default parameter value with type hint in Python

Your second way is correct.

def foo(opts: dict = {}):
    pass

print(foo.__annotations__)

this outputs

{'opts': <class 'dict'>}

It's true that's it's not listed in PEP 484, but type hints are an application of function annotations, which are documented in PEP 3107. The syntax section makes it clear that keyword arguments works with function annotations in this way.

I strongly advise against using mutable keyword arguments. More information here.

If you're using typing (introduced in Python 3.5) you can use typing.Optional, where Optional[X] is equivalent to Union[X, None]. It is used to signal that the explicit value of None is allowed . From typing.Optional:

def foo(arg: Optional[int] = None) -> None:
    ...

I recently saw this one-liner:

def foo(name: str, opts: dict=None) -> str:
    opts = {} if not opts else opts
    pass