Foreigners working in China are subject to a progressive Individual Income Tax (IIT) system with rates ranging from 3% to 45% across seven tax brackets. Your tax is calculated on your cumulative comprehensive income throughout the calendar year after accounting for standard deductions, social insurance, and tax-free allowances.
The 2026 Individual Income Tax brackets
China calculates personal income tax using annual progressive brackets. Your employer will automatically withhold and remit your taxes on a monthly basis, adjusting the cumulative total as your year-to-date income grows.
| Annual Taxable Income (RMB) | Tax Rate | Quick Deduction (RMB) |
| Up to 36,000 | 3% | 0 |
| 36,001 – 144,000 | 10% | 2,520 |
| 144,001 – 300,000 | 20% | 16,920 |
| 300,001 – 420,000 | 25% | 31,920 |
| 420,001 – 660,000 | 30% | 52,920 |
| 660,001 – 960,000 | 35% | 85,920 |
| Above 960,000 | 45% | 181,920 |
How the quick deduction works: To find your tax burden without doing complex step-by-step math for every single bracket, you can multiply your total annual taxable income by the top applicable tax rate and then subtract the corresponding quick deduction amount.
Finding your actual taxable income
Your raw gross salary is not the amount that gets taxed. To find your true taxable income, the local tax bureau applies several key deductions:
- The standard deduction: Every worker receives a flat statutory deduction of 5,000 RMB per month (60,000 RMB per year), which is immediately taken off the top of your gross pay.
- Social security contributions: In major hubs like Shanghai or Shenzhen, foreigners are generally required to contribute to the local social insurance system (pension, medical, and unemployment insurance). Your portion of these monthly payments is fully tax-deductible.
- Expat tax-free allowances: Foreign employees can claim special tax-free benefits if they are fully documented with official invoices (fapiao). These cover essential living costs like apartment rent, children’s tuition fees, language training courses, and domestic airfare for home leave trips.
The 183-day residency rule and the 6-year global tax trap
Your total tax liability depends entirely on your residency status. If you spend fewer than 183 days inside mainland China during a calendar year, you are considered a non-resident and are only taxed on the income you actively earn within Chinese borders.
If you cross the 183-day threshold, you officially become a tax resident. This triggers the Six-Year Rule. Under this regulation, you are exempt from paying Chinese tax on your worldwide income (such as US rental income or foreign investments) for your first six consecutive years of residency.
However, if you stay in China for six consecutive years without a specific break, your global income becomes fully taxable by China starting in the seventh year. To reset this six-year clock and protect your overseas assets, you must spend more than 30 consecutive days outside of mainland China during a single calendar year before the six-year window closes.