China Unveils Special Individual Income Tax Deductions

China TaxChina’s State Bureau of Taxation announced the special individual income tax deductions which was implemented on 1st January 2019, to lower the overall tax burden for certain individuals. The deductions relate to six areas, including children's education, continuing education, health treatment for serious diseases, housing loan interests, rent and elderly care.

For children's education, a total amount of RMB 1,000 (USD 145) can be deducted each month from the parents' taxable income (either 100% by one parent or on 50/50 split) for each child's education and covers preschool to diploma education.

Taxpayers who receive continuing education can enjoy the deduction of RMB 400 a month up to 48 months or a total of RMB 4,800 per year for a diploma and RMB 3,600 for a professional qualification.

Taxpayers with serious diseases can have out-of-pocket medical costs (over RMB 15,000 and under RMB 80,000) deducted from their taxable income each year. Medical expenses of minor children can be deducted by parents.

Taxpayers or their spouses who have mortgage loans for a first home can have a deduction of RMB 1,000 per month (RMB 12,000 per year, up to 240 months or 20 years) from their taxable income.

Housing rent deductions of up to RMB 18,000 each year will be granted to taxpayers owning no housing in the city where they work. Deduction amounts are based on working locations.

Deductions will also be made for supporting the elderly. An amount of up to RMB 2,000 every month will be deducted from an only child taxpayer's taxable income for his or her parent who is over 60. Those who have siblings can share the RMB 2,000 deduction quota and each child cannot claim more than RMB 12,000.

The remit of these categories is wide and most taxpayers would be eligible for one or several tax deductions.

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