Last verified with Chinese Government sources:
China taxes residents on annual comprehensive income and non-residents month by month, and the two produce very different answers on the same salary. This works both, applies the deductions you are actually entitled to — including the either/or election that only foreign nationals get — and shows the thing that surprises everybody on a flat salary: your net pay falls through the year.
This models salary income for one employer under the standard rules. It does not handle tax treaties, equity and RSUs, income from more than one employer, the other comprehensive-income categories (labour service, author's remuneration, royalties), serious-illness medical costs — which are claimable only at the reconciliation — donations, annuities, or the 90-day threshold that applies to short-stay non-residents. It cannot know your domicile. I am not an accountant. If real money turns on the answer, pay a China-qualified adviser, and read the full tax guide first.
The two systems
Residents — 183 days or more in the calendar year — are taxed on annual comprehensive income, which pools wages, labour service remuneration, author's remuneration and royalties. From that you deduct ¥60,000 a year, your own statutory social insurance and housing fund, the special additional deductions, and other statutory items. What is left runs through seven progressive bands from 3% to 45%. Not sure which side of 183 days you are? Count your days first — the rule is stricter than it looks.
Non-residents are taxed month by month on China-sourced income, with a ¥5,000 monthly deduction and none of the special additional deductions. There is no part-year residency and no annual true-up. A second threshold sits at 90 days, and a treaty usually replaces it — neither is modelled here.
The election only foreign nationals get
Through to 31 December 2027, a foreign individual may choose either the special additional deductions or the eight tax-exempt benefit-in-kind categories — housing allowance, meals, laundry, relocation, reasonable business travel, home leave, language training, and children's education in China. You cannot take both, and the choice is generally fixed for the tax year.
Which wins depends entirely on your package. A high housing allowance usually beats the special deductions comfortably; a modest salary with two children in education and elderly parents often does not. Switch the dropdown and compare — that is the whole point of having it here.
Be careful with this one. The benefits have been given a hard expiry twice and rescued twice. As at August 2026 I could find no announcement of a further extension or an early end, which is not the same as knowing what happens next. Re-read the current announcement ↗ before each tax year.
Why your December payslip is smaller than your January one
Employers withhold on a cumulative basis — 累计预扣法 — recomputing year-to-date taxable income each month and withholding the difference. On a flat salary that means your effective rate climbs as cumulative income crosses each band, so net pay falls through the year even though nothing about your contract changed. The chart above shows the shape on your own numbers. It is not an error, and the annual reconciliation the following spring settles the true position.