China Income Tax Calculator

What is Chinese Individual Income Tax?

Chinese Individual Income Tax (IIT) is a progressive tax imposed by the People's Republic of China on the income of individuals. It applies to both Chinese citizens and foreigners working in China. The tax is calculated based on taxable income, which is the amount left after subtracting various deductions from the total income.

The Chinese Income Tax Formula

The general formula for calculating Chinese income tax is:

\[Tax = \sum_{i=1}^{n} (TaxableIncome_{i} \times Rate_{i})\]

Where:

• \(TaxableIncome_{i}\) = Taxable income in bracket i
• \(Rate_{i}\) = Tax rate for bracket i
• n = Number of applicable tax brackets

Step-by-Step Tax Calculation

1. Calculate the taxable income by subtracting deductions from the total income.
2. Identify the applicable tax brackets and rates based on the taxable income.
3. Calculate the tax for each bracket where income falls: \[Tax_{bracket} = (TaxableIncome_{in bracket} - Lower threshold) \times Rate_{bracket}\]
4. Sum up the tax from all applicable brackets to get the total tax.
5. Calculate the effective tax rate: \[Effective Rate = \frac{Total Tax}{Taxable Income} \times 100\%\]

Example Calculation

Let's calculate the Chinese income tax for an individual with an annual income of 200,000 CNY and standard deductions of 60,000 CNY:

1. Taxable Income: \(200,000 - 60,000 = 140,000 CNY\)
2. 0 - 36,000 CNY: \(36,000 \times 3\% = 1,080 CNY\)
3. 36,001 - 140,000 CNY: \((140,000 - 36,000) \times 10\% = 10,400 CNY\)
4. Total Tax: \(1,080 + 10,400 = 11,480 CNY\)
5. Effective Tax Rate: \(\frac{11,480}{140,000} \times 100\% = 8.2\%\)

Visual Representation

The blue portion of the bar represents the effective tax rate (8.2%) for the given income in this example.