2026 Individual Income Tax Comprehensive Income Annual Reconciliation Practical Essentials

The individual income tax (IIT) comprehensive income annual reconciliation directly affects the interests of every employee, and enterprise HR and finance staff have an obligation to assist employees in understanding the policy.

1. Scope and Timing

Resident individuals who receive four categories of comprehensive income—wages and salaries, remuneration for independent personal services, author's remuneration, and royalties—calculate IIT on a consolidated basis per tax year. The annual reconciliation period is March 1 to June 30 of the following year. Taxpayers without domicile in China may file early before departure.

2. Supplementary Tax and Refund Scenarios

Refund scenarios include: annual comprehensive income below RMB 60,000 but IIT was prepaid; eligible special additional deductions not declared at the prepayment stage; insufficient standard deduction due to mid-year employment or termination. Supplementary tax scenarios include: employment with two or more employers receiving wages, resulting in duplicate standard deduction at withholding.

3. Special Additional Deductions

Seven categories of special additional deductions are available: children's education, continuing education, serious illness medical treatment, housing loan interest, housing rent, elderly care, and childcare for children under age 3. Taxpayers may supplement these during reconciliation. Serious illness medical expenses can only be deducted at annual reconciliation; the other six may be enjoyed at the withholding stage.

4. Enterprise Obligations

Withholding agents must file full-amount withholding declarations for all employees and provide taxpayers with information on their personal income and tax withheld. Enterprises may assist employees in filing via the IIT app but must not act on their behalf without authorization. Reconciliation may be waived if the supplementary tax amount does not exceed RMB 400.