Foreign individuals who qualify as Chinese tax residents may choose either special additional deductions for individual income tax or IIT exemptions on eligible allowances and subsidies, such as housing, children's education and language training. 

Please that the two types of tax benefits cannot be claimed simultaneously, and the choice cannot be changed within the same tax year. The subsidy exemption policy remains in effect through Dec 31, 2027.

Here are the key rules of eligible allowances and subsidies for expats in China:

• Foreign individuals who receive reasonable housing subsidies, meal allowances and laundry fees in non-cash form or on a reimbursement basis may be exempt from IIT. When filing their IIT return for wages and salaries in the month after they first receive such subsidies or the amount or payment method changes, they must submit valid supporting documents to the competent tax authority for verification and confirmation of the exemption.
• Foreign individuals who receive relocation reimbursements on an actual-expense basis in connection with taking up or leaving employment in China may be exempt from IIT on the reasonable portion, provided they submit valid supporting documents for review by the competent tax authority.
• Monthly or periodic payments made in the name of relocation by foreign-invested enterprises or by establishments or premises of foreign enterprises in China to their foreign employees must be included in taxable wages and salaries.
• Foreign individuals who receive domestic or overseas business travel allowances based on reasonable standards may be exempt from IIT, provided they submit copies of transportation and accommodation receipts or the employer's relevant business travel plan for confirmation by the competent tax authority.
• Foreign individuals who receive subsidies for language training in China or for their children's education in China may be exempt from IIT on the reasonable portion, provided they submit expense receipts and documents showing the duration of the training or education for review by the competent tax authority.
• Foreign individuals who receive family-visit allowances may be exempt from IIT on the portion actually used for their own family visits, provided they submit copies of relevant transportation expense receipts and the competent tax authority determines that the number of visits per year and the payment standards are reasonable.

In addition to the tax benefits outlined above, wages and salaries earned by foreign experts may be exempt from IIT if they meet any of the following conditions:

• They are directly dispatched to work in China by the World Bank under a special-purpose loan agreement.
• They are directly dispatched to work in China by a United Nations organization.
• They work in China on a United Nations aid project.
• They are sent by a donor country to work in China on a non-reimbursable aid project funded by that country.
• They are cultural or educational experts who work in China for no more than two years under a cultural exchange program agreed between the governments of the two countries, with their wages and salaries paid by the sending country.
• They are cultural or educational experts who work in China for no more than two years under an international exchange program of a Chinese college or university, with their wages and salaries paid by the sending country.
• They work in China under a nongovernmental scientific research agreement, with their wages and salaries paid by a government institution in the sending country.

Below are FAQs about special additional individual income tax deductions. 

Infant care

Q: How much can be deducted if I have a child under the age of three?

A: If you have children under age three, the deduction standard is 24,000 yuan ($3,300) per child per year, or 2,000 yuan per month. Parents may choose either a full deduction for one parent or a 50/50 split between both parents.

Q: If my child was born abroad, can I still claim the deduction?

A: Yes. Whether the infant is born in China or abroad, parents can claim the deduction. 

Children's education

Q: What is the deduction standard for children's education expenses? 

A: 24,000 yuan annually (2,000 yuan monthly) per child. This deduction covers full-time education from preschool at age three up to a doctoral degree. 

Q: Can I claim the deduction for children's education if my children attend private schools?

A: Yes. Whether your children attend public or private schools, you can claim the deduction. 

Q: I am not the biological parent of the child, but I am responsible for raising and educating him/her. Can I claim deductions?

A: Yes. If you are the child's legal guardian and assume responsibility for his/her support and education, you can claim deductions for his/her education expenses. 

Q: My child graduated from undergraduate studies and is preparing for the postgraduate admissions test. Can I deduct the education expenses?

A: No. Since your child has not yet enrolled in a full-time postgraduate program, they do not meet the conditions for child education expenses. 

Continuing education 

Q: What is the scope of deductions for continuing education?

A: Taxpayers in China can deduct expenses for continuing education in the country at an amount of 400 yuan per month, within a period not exceeding 48 months. 

Q: Can expenses for extracurricular classes that do not issue an official certificate be deducted?

A: No. The special additional deductions for continuing education are limited to expenses for academic continuing education, vocational qualification continuing education for skilled personnel, and professional and technical personnel. Expenses for extracurricular classes such as floral arrangement are not eligible for deductions. 

Supporting the elderly parents/grandparents

Q: What is the scope of deductions for supporting elderly relatives?

A: Eligible dependants are parents aged 60 or above, or paternal or maternal grandparents aged 60 or above whose children have all died.

Q: What is the deduction standard for supporting elderly parents?

A: Taxpayers who are the only child are entitled to a deduction of 3,000 yuan per month. Taxpayers who are not the only child must share the deduction with their siblings, with the shared amount not exceeding 1,500 yuan per month per taxpayer. 

Serious illness medical expenses 

Q: What is the deduction for serious illness medical treatment?

A: Within a tax year, you can deduct the portion of out-of-pocket medical expenses under the basic medical insurance program that exceeds 15,000 yuan, up to a maximum of 80,000 yuan. This deduction is filed only during the annual comprehensive income settlement.

Q: Can I claim the deduction for serious illness medical expenses when seeking treatment at a private hospital?

A: Yes. As long as the private hospital is included in the medical insurance settlement system, your expenses are eligible for the deduction for serious illness medical expenses. 

Housing loan interest

Q: What is the scope of deductions for housing loan interest?

A: If you or your spouse, either separately or jointly, buy your first property in China using loans from commercial banks or housing provident funds, you can claim a deduction for housing loan interest. A taxpayer cannot claim both housing loan interest and housing rent deductions in the same tax year. 

Q: What is the standard of housing loan interest deduction ?

A: You can claim a deduction of 1,000 yuan per month, with a maximum period of 240 months. 

Housing rent

Q: What is the scope of deductions for housing rent? 

A: If you and your spouse do not own a home in your primary work city and incur rental expenses there, you may claim a fixed monthly deduction.

Q: What is the standard of housing rent deduction? 

A: The deduction amount ranges from 800 to 1,500 yuan depending on the city where the rented property is located. As for Shanghai, the standard is 1,500 yuan a month. 

Updated July 29, 2026

Sources: State Taxation Administration, Ministry of Finance