August 2026 · 8 min read · Free calculator →
If you work in China — or employ people here — understanding China's Individual Income Tax (IIT) is essential. This guide breaks down how the 2026 tax system works, what you can deduct, and how to calculate what you owe. No jargon, just the facts.
Anyone earning income in China — Chinese citizens and foreigners alike — is subject to IIT. The key distinction is tax residency:
| Status | Definition | Key Impact |
|---|---|---|
| Resident | Living in China for 183 days or more in a tax year | Taxed on worldwide income (with some exemptions) |
| Non-resident | Less than 183 days in a tax year | Taxed only on China-sourced income |
Everyone gets a standard monthly deduction of ¥5,000 (¥60,000 per year) before tax is calculated. This applies to both residents and non-residents.
Your personal contributions to social insurance and the housing fund (五险一金) are deducted from taxable income. These typically include:
Residents can claim additional deductions on top of the basic deduction. These are the 2026 standards:
| Deduction | Monthly Amount | Notes |
|---|---|---|
| Child education (子女教育) | ¥1,000 per child | For children in education (up to PhD) |
| Elderly care (赡养老人) | ¥3,000 (only child) ¥1,500 (shared) | Supporting parents aged 60+ |
| Housing rent (住房租金) | ¥800 / ¥1,100 / ¥1,500 | By city tier, for those who rent |
| Housing loan interest (住房贷款利息) | ¥1,000 | First home loan, up to 240 months |
| Continuing education (继续教育) | ¥400 (academic) ¥3,600/yr (cert) | Degree study or professional certificates |
| Infant care under 3 (婴幼儿照护) | ¥1,000 per child | For children under 3 |
| Serious illness (大病医疗) | Up to ¥80,000/yr | For out-of-pocket medical costs |
Foreign residents have a choice: either claim the special additional deductions above, or take tax-exempt allowances (housing allowance, home-leave travel, language training, children's education fees, meal & laundry allowances). You cannot take both. For most expats with employer-provided allowances, the allowances option is more valuable.
Non-resident foreigners do not qualify for special additional deductions — only the ¥5,000 basic deduction.
China uses a progressive tax system with seven brackets on annual taxable income:
| Annual Taxable Income (CNY) | Rate | Quick Deduction |
|---|---|---|
| 0 – 36,000 | 3% | 0 |
| 36,000 – 144,000 | 10% | 2,520 |
| 144,000 – 300,000 | 20% | 16,920 |
| 300,000 – 420,000 | 25% | 31,920 |
| 420,000 – 660,000 | 30% | 52,920 |
| 660,000 – 960,000 | 35% | 85,920 |
| 960,000+ | 45% | 181,920 |
Salary ¥30,000/month, social insurance ¥4,500, no special deductions:
Your year-end bonus can be taxed two ways — separately (divided by 12 and taxed at the monthly rate table) or combined with your annual income. You can choose whichever is cheaper (until 2027). A separate bonus calculation is often better for higher earners, but always compare.
Residents must file an annual settlement between March 1 and June 30 each year to reconcile the tax withheld monthly with your final annual tax liability. If too much was withheld, you get a refund — if too little, you pay the difference.
This article is for general information only and does not constitute tax advice. Tax rules can change — always verify with a qualified professional.