China announces further reduction on individual income tax
China will further reduce the tax burden for those who have children to raise or elderly to support, according to a State Council circular issued on Thursday.
Starting January 1, 2023, the individual taxable income of parents rearing children under 3 years old will be reduced by 2,000 yuan (US$278.5) per month for each child, up from the current 1,000 yuan deduction, the circular stated.
For children's education, a total of 2,000 yuan will be deducted every month from the taxable income of parents for each child, doubling the present level.
For those who have the elderly to take care of, a sum of 3,000 yuan per month will now be deducted from their taxable income if he or she is an only-child. Individuals with siblings have the option to share this deduction quota. This deduction is applicable to taxpayers with a parent who is over 60 years old or a grandparent whose children are deceased, marking a 1,000-yuan increase from the previous amount.
First unveiled in 2018, China's special individual income tax deductions are designed to lower the tax burden for those who have certain expenditures covering areas such as children's education, continuing education, medical treatment for serious diseases, housing loans, rent and elderly care.