The 2026 Basic Deduction Remains CNY 5,000
China's basic deduction (the so-called "threshold") stays at CNY 5,000 per month (CNY 60,000 per year) in 2026, set by Article 6 of the Individual Income Tax Law and uniform nationwide. The figure has held for 8 years since the 2018 reform.
Important: CNY 5,000 is a deduction, not a "tax-free below 5,000" line. Social insurance and special additional deductions are subtracted too, so many people only owe tax at higher gross incomes.
The Seven-Bracket Schedule, Complete
Comprehensive income uses seven progressive brackets, computed annually and withheld monthly:
| Bracket | Annual Taxable Income | Rate | Quick Deduction |
|---|---|---|---|
| 1 | ≤ CNY 36,000 | 3% | 0 |
| 2 | CNY 36,000 – 144,000 | 10% | 2520 |
| 3 | CNY 144,000 – 300,000 | 20% | 16920 |
| 4 | CNY 300,000 – 420,000 | 25% | 31920 |
| 5 | CNY 420,000 – 660,000 | 30% | 52920 |
| 6 | CNY 660,000 – 960,000 | 35% | 85920 |
| 7 | > CNY 960,000 | 45% | 181920 |
Example: CNY 200K comprehensive income minus the CNY 60K deduction and CNY 30K special deductions leaves CNY 110K taxable → 10% bracket → CNY 8,480 tax.
The 7 Special Additional Deductions, Complete
- Child education: CNY 2,000/month per child; parents split 50/50 or one claims all
- Infant & toddler care (under 3): CNY 2,000/month, non-overlapping with child education
- Continuing education: CNY 400/month for degrees, CNY 3,600/year for qualifications
- Serious medical expenses: the portion above CNY 15,000 out-of-pocket, capped at CNY 80,000/year
- Mortgage interest: CNY 1,000/month for a first home, up to 240 months
- Housing rent: CNY 800/1,100/1,500 per month by city tier
- Elderly care: CNY 3,000/month for only children, up to CNY 1,500 otherwise
How Cumulative Withholding Actually Works
Employers withhold monthly using the cumulative method:
Withholding this period = (cumulative income − cumulative exempt income − cumulative deductions − cumulative social insurance − cumulative special deductions − other deductions) × rate − quick deduction − tax already withheld
So withholding is lighter early in the year and heavier later as cumulative income crosses brackets. Between March and June the following year, reconcile in the Individual Income Tax app — refunds or top-ups follow.
4 Typical Income Profiles, Worked
1. CNY 8,000/month, no special deductions
Annual taxable = (8,000 − 5,000) × 12 = 36,000 → 3% bracket → CNY 1,080/year, CNY 90/month.
2. CNY 15,000/month, one child + one parent
Deductions = 2,000 + 1,500 = 3,500; taxable = (15,000 − 5,000 − 3,500) × 12 = 78,000 → 10% → CNY 5,280/year.
3. CNY 30,000/month, only child, one child, first mortgage
Deductions = 2,000 + 3,000 + 1,000 = 6,000; taxable = 228,000 → 20% → CNY 28,680/year.
4. CNY 100,000/month, no special deductions
Taxable = 1,140,000 → 45% → CNY 331,080/year — an effective rate of about 27.59%.