How income tax works in China
China taxes domiciled individuals, and non-domiciled people present 183 days or more in the year, on worldwide income. People below that line pay only on China-source income.
Salary, labour fees, author pay and royalties are pooled as comprehensive income and taxed annually at seven rates from 3% to 45%. Everyone gets a CNY 60,000 basic deduction plus social insurance, housing fund and up to seven family deductions.
Employers withhold each month on a cumulative basis, and taxpayers file an annual reconciliation from March to June. Resident foreigners choose each year between tax-free expat allowances and local family deductions, extended through 2027.
Income tax brackets in China
| Bracket | Rate | Notes |
|---|---|---|
| Up to CNY 36,000 | 3% | After CNY 60,000 deduction |
| CNY 36,001 to CNY 144,000 | 10% | Annual comprehensive income |
| CNY 144,001 to CNY 300,000 | 20% | Annual comprehensive income |
| CNY 300,001 to CNY 420,000 | 25% | Annual comprehensive income |
| CNY 420,001 to CNY 660,000 | 30% | Annual comprehensive income |
| CNY 660,001 to CNY 960,000 | 35% | Annual comprehensive income |
| CNY 960,001 and above | 45% | Top marginal rate |
Tax rates at a glance
- Entry rate
- 3%To CNY 36,000
- Top rate
- 45%
- Basic deduction
- CNY 60,000
- Family deductions
- 7 items
- Business income
- 5% - 35%
- Dividends and property gains
- 20%
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
EmployeesExpatsContractorsHigh earnersCross-border workers
Watch out for
- The 183-day test uses cumulative presence in the calendar year. Short trips add up, and a foreigner who expected non-residence can slip into worldwide taxation.
- Six consecutive 183-day years without a 30-day exit bring non-domiciled foreigners into worldwide taxation. Keep travel records if you are approaching year six.
- Annual bonuses can be taxed stand-alone or pooled with salary through 2027. The better choice depends on total income, so model both before the employer files.
- Social insurance, housing fund and mandatory benefits sit on top of income tax. Total payroll cost runs well above the income-tax bands alone.
Frequently asked questions
Do expats pay income tax in China?
Yes, on China-source income, and on worldwide income if domiciled or present 183 days or more. Non-domiciled newcomers are sheltered from worldwide tax for their first six qualifying years.
What is the top income tax rate in China?
The top marginal rate on pooled salary income is 45% above CNY 960,000 a year after deductions.
Are foreign allowances or local deductions better for expats?
Usually the tax-free allowances for housing, schooling and home leave win for well-paid expats, but the choice locks per calendar year. Compare both with your real spending before January.
When do Chinese taxpayers file?
Employers withhold monthly, and individuals reconcile the prior year between March and June, claiming deductions and settling any balance.