Chinese residents could benefit from further income tax reduction by the end of this year, as a tax deduction list has been released for public opinion on Saturday.
The Ministry of Finance and the State Administration of Taxation published the personal income tax deduction plan seeking public opinion on Saturday.
The final version is scheduled to be released by the end of this year.
The special deduction items are related to children's education, adult reeducation, treatment of serious diseases, the livelihood of elder people, housing loan interest and home rent.
It means people who have expenditures related to the above items could enjoy lower personal income tax after they report relevant spending information to the tax authority.
According to the draft plan, expenditures on children's education could be deducted at a fixed standard of 12,000 yuan ($1,732) a year, or 1,000 yuan per month. Expenses on reeducation could be deducted at 3,600 yuan or 4,800 yuan a year.
On medical costs of serious illness, the yearly expenditure spent by the patient above 15,000 yuan could be deducted, with an annual cap of 60,000 yuan.
On interest for loan for first home by the taxpayers or their spouses, a monthly deduction of 1,000 yuan will be allowed.
For housing rent, the deduction will vary from cities, ranging from 800 yuan to 1,200 yuan a month.
If taxpayers are supporting parents aged 60 or above, they could get a monthly deduction of 2,000 yuan. Only children could enjoy the whole sum of 2,000 yuan in deduction, while the sum will be divided among siblings if there is more than one child.
The new policy is expected to take effect from Jan 1, 2019, according to the document on the website of the finance ministry.
The new policy follows a raising of the threshold of personal income tax from 3,500 yuan ($544) to 5,000 yuan per month. The tax reform will significantly help reduce the tax burden on low-and middle-income groups, and raise people's disposable income and promote domestic consumption, said experts.
"The scale and intensity of the tax cut, according to the deduction plan, are stronger than expected," said Sun Gang, a researcher with Chinese Academy of Fiscal Sciences. "The policy considers both fairness and practicality to make the implementation as easy as possible."
