STA Interpretation: Implementing Raised IIT Special Additional Deduction Standards

关于《国家税务总局关于贯彻执行提高个人所得税有关专项附加扣除标准政策的公告》的解读

Source (Chinese): STA Policy Database — 政策解读 (STA General Office, August 31, 2023)

English translation: Independent translation. Not an official government translation.

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In accordance with the provisions of the Notice of the State Council on Raising Certain Individual Income Tax Special Additional Deduction Standards (Guo Fa [2023] No. 13, hereinafter the "Notice"), the State Taxation Administration has issued the Announcement of the State Taxation Administration on Implementing the Policy of Raising Certain Individual Income Tax Special Additional Deduction Standards. The interpretation is as follows:

Q1: What are the specific provisions for raising the standards of the IIT special additional deductions for childcare for children under 3, children's education, and elderly care?

Answer: The Notice provides that, effective January 1, 2023:

• The special additional deduction standard for childcare for children under 3 years of age is raised from RMB 1,000 per infant per month to RMB 2,000 per infant per month.

• The special additional deduction standard for children's education is raised from RMB 1,000 per child per month to RMB 2,000 per child per month.

• The special additional deduction standard for elderly care is raised from RMB 2,000 per month to RMB 3,000 per month. Specifically: an only child may deduct RMB 3,000 per month; non-only children share the monthly deduction of RMB 3,000 with their siblings, with each person's share not exceeding RMB 1,500.

Q2: For taxpayers who have not yet reported claims for the "young children and elderly" deductions, how should they claim them?

Answer: Taxpayers who have not yet reported claims for the 2023 special additional deductions for childcare for children under 3, children's education, or elderly care may do so by filling in the special additional deduction information through the IIT App or through their employer. Starting from the September tax filing period, taxpayers may have their employer apply the new raised standards for withholding, or they may claim the deductions at the new standards when filing the 2023 annual IIT reconciliation.

Q3: For taxpayers who have already reported claims for the "young children and elderly" deductions, do they need to resubmit the relevant information?

Answer: Taxpayers who have already reported claims for the 2023 special additional deductions for childcare for children under 3, children's education, or elderly care do not need to report again. The system will automatically calculate the IIT payable based on the raised deduction standards. Taxpayers who wish to adjust the agreed or designated allocation of the elderly care special additional deduction may fill in the new allocation amounts through the IIT App or through their withholding agent.

Q4: For taxpayers who have already claimed the "young children and elderly" deductions at the original standards, how do they claim at the raised standards?

Answer: For taxpayers who, prior to the publication of the Notice, have already reported claims for the 2023 special additional deductions for childcare for children under 3, children's education, or elderly care at the original standards, the system will automatically calculate the IIT payable based on the raised standards starting from September. Any excess taxes previously paid may be automatically offset against the tax payable in subsequent months of the year. If the offset is not fully absorbed, taxpayers may continue to claim the benefit when filing the 2023 annual comprehensive income reconciliation.

Q5: What are the legal consequences for taxpayers who falsely report special additional deductions?

Answer: Taxpayers bear responsibility for the truthfulness, accuracy, and completeness of their special additional deduction information. When a taxpayer's circumstances change, the taxpayer should promptly provide the relevant information to their employer or the tax authority. For false claims of special additional deductions, the tax authority will handle the matter in accordance with the Tax Collection and Administration Law of the People's Republic of China, the Individual Income Tax Law of the People's Republic of China, and other relevant provisions.