Individual income tax

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Individual income tax

english.shanghai.gov.cn

Who should pay individual income tax

An individual who has a domicile in China, or who has no domicile in China but has resided in China for an aggregate of 183 days or more in a tax year, shall be treated as a resident taxpayer for Chinese individual income tax purposes. A tax year runs from Jan 1 to Dec 31.

For an individual without a domicile in China, only days on which one stays in China for a full 24 hours are counted as days of residence in China.

As a general rule, resident individuals pay individual income tax on income derived from both within and outside China. However, under the six-year rule, special exemptions may apply to resident individuals without a domicile in China.

An individual without a domicile in China who has resided in China for an aggregate of 183 days or more in a tax year shall be exempt from Chinese individual income tax on income derived from sources outside China and paid by an overseas entity or individual, provided that the number of consecutive years in which they have met the 183-day threshold is less than six, and that they have filed a record with the competent tax authority.

The consecutive-year count will restart if, in any tax year, the individual either resides in China for less than 183 days, or has a single absence from China exceeding 30 consecutive days.

If an individual has no domicile in China and has not resided in China for an aggregate of 183 days or more in a tax year, they will be classified as a non-resident individual and will be subject to individual income tax only on income derived from sources within China.

However, a non-resident individual who stays in China for no more than 90 days in a tax year shall be exempt from tax on employment income derived from sources within China, provided that such income is paid by an overseas employer and is not borne by a permanent establishment or fixed place of business of the employer in China. Please note that this 90-day exemption does not apply to directors, supervisors, or senior executives; their China-sourced employment income is taxable regardless of the payer.

How to file taxes

Resident individuals who receive wages and salaries, remuneration for personal services, author's remuneration, or royalties — collectively referred to as comprehensive income — calculate their individual income tax annually.

Individuals required to complete annual reconciliation must file an annual tax reconciliation return with the tax authorities between March 1 and June 30 of the following year and settle any tax due or claim any refund. Individuals without a domicile in China who leave the country before the annual reconciliation period begins may complete annual reconciliation before departure.

Non-resident individuals are not required to complete annual reconciliation for comprehensive income. Tax on wages and salaries is generally withheld monthly, while tax on remuneration for personal services, author's remuneration, and royalties is withheld on each payment.

A non-resident individual receiving wages and salaries from two or more sources within China must generally file a tax return within the first 15 days of the following month. An individual receiving taxable income for which there is no withholding agent must also generally file and pay tax within the first 15 days of the following month.

China has signed agreements to avoid double taxation with over 100 countries and regions. Expats may check whether they qualify for tax reductions or exemptions under these treaties.

Here is a list of the countries and regions that have signed an agreement with China to prevent double taxation.

How much to pay

Comprehensive income is subject to progressive individual income tax rates, meaning the applicable rate increases as taxable income rises.

Calculating Taxable Income

Personal Income Tax Rates (Yearly Income)

(For resident individuals)

Bracket	Annual Taxable Income (yuan)	Tax Rate	Quick Tax Deduction (yuan)
1	36,000 or less	3%	0
2	Over 36,000 and up to 144,000	10%	2,520
3	Over 144,000 and not exceeding 300,000	20%	16,920
4	Over 300,000 and not exceeding 420,000	25%	31,920
5	Over 420,000 and not exceeding 660,000	30%	52,920
6	Over 660,000 and not exceeding 960,000	35%	85,920
7	Over 960,000	45%	181,920

Annual taxable income = Annual comprehensive income – 60,000 yuan – special deductions – special additional deductions – other deductions permitted by law – eligible charitable donations

Note: "Special deductions" refer to social insurance and housing fund contributions; "special additional deductions" cover eligible expenses such as child education, continuing education, medical expenses, housing costs, and elderly care support.

Personal Income Tax Rates (Monthly Income)

(For non-resident individuals)

Bracket	Monthly Taxable Income (yuan)	Tax Rate	Quick Tax Deduction (yuan)
1	3,000 or less	3%	0
2	More than 3,000 and up to 12,000	10%	210
3	Over 12,000 and not exceeding 25,000	20%	1,410
4	Over 25,000 and not exceeding 35,000	25%	2,660
5	Over 35,000 and not exceeding 55,000	30%	4,410
6	Over 55,000 and not exceeding 80,000	35%	7,160
7	Over 80,000	45%	15,160

Monthly taxable income from wages and salaries = Monthly wages and salaries – 5,000 yuan

Monthly tax payable = (Monthly taxable income × Applicable tax rate) – Quick deduction

For remuneration for personal services, author's remuneration, and royalties, taxable income is calculated for each payment under the applicable statutory rules.

What are the tax benefits for expats

Through Dec 31, 2027, foreign individuals who qualify as resident individuals may choose either special additional deductions or tax-exempt treatment for eligible allowances, but not both. Once a choice is made, it cannot be changed within the same tax year.

Eligible allowances may include housing, meals, relocation, laundry, business travel, home leave, language training, and children's education expenses.

From Jan 1, 2028, expats will no longer be able to enjoy the tax-free treatment of housing subsidies, language training, and children's education fees.

Wages and salaries earned by foreign experts who meet certain conditions may be exempt from individual income tax.

What if one's tax residency status changes

When filing for the first time in a tax year, an individual without a domicile in China should estimate the number of days they expect to reside in China for the year and calculate their tax based on that estimate.

If an individual initially treated as a non-resident later meets the conditions for resident status due to an extended stay, the withholding method remains unchanged for the tax year. The individual should complete annual reconciliation as a resident after the year ends. If the individual leaves China during the year and does not expect to return before year-end, annual reconciliation may be completed before departure.

If an individual initially treated as a resident later fails to meet the residency conditions due to a shortened stay, they must report the change to the competent tax authority within the period beginning on the date they fail to meet the resident conditions and ending 15 days after the end of the tax year. Their tax liability will be recalculated under the rules for non-resident individuals. Additional tax must be paid, or a refund may be claimed, as applicable. No late-payment surcharge will be imposed on the resulting additional tax if the adjustment is made within the prescribed period.

If an individual without a domicile in China expects to reside in China for an aggregate of no more than 90 days in a tax year but actually exceeds 90 days, or if an individual who is a resident of a tax treaty partner expects to stay in China for no more than 183 days within the period specified in the applicable tax treaty but actually exceeds 183 days, they shall report to the competent tax authority within 15 days after the end of the month in which the 90-day or 183-day threshold is reached, recalculate the tax payable on wages and salaries for the preceding months, and pay the additional tax due. No late-payment surcharge shall be imposed on the additional tax.

For further inquiries regarding tax services, please contact Shanghai's tax hotline at 12366.

Updated July 29, 2026

Sources: State Taxation Administration, Shanghai Municipal Tax Service

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