The calculation method of personal income tax: taxable income = (monthly income - five social insurances and one housing fund - threshold - other deductions determined in accordance with the law - special additional deductions)

It will come into effect on October 1, 2018, and the latest threshold and tax rate will come into effect on October 1, 2018.

The new personal income tax law stipulates that from October 1, 2018 to December 31, 2018, taxpayers’ wages and salary income shall be based on the monthly income minus an expense of 5,000 yuan, special deductions and other deductions determined in accordance with the law.

The balance is the taxable income, and the tax is calculated and paid according to the personal income tax rate table (applicable to comprehensive income) on a monthly basis, and no additional deductions will be deducted.

Extended information: The new personal income tax law further adjusts and optimizes some tax brackets of personal income tax.

After the reform, salary income is comprehensive income, and the applicable tax rate remains unchanged at the seven-level progressive tax rate of 3% to 45%. However, the gap between each tax rate has been adjusted and optimized, and has been expanded to 3%, 10%, and 20%.

The gap between the three low tax brackets will be reduced, and the gap between the 25% tax bracket will be narrowed.

According to the new individual income tax law, special deductions include: basic pension insurance premiums, basic medical insurance premiums, unemployment insurance and other social insurance premiums and housing provident funds paid by individual residents in accordance with the scope and standards stipulated by the state.

Special additional deductions include: children’s education, continuing education, serious illness medical treatment, housing loan interest or housing rent, elderly care and other expenses.