In this round of individual income tax law revision, the most attention-grabbing aspect is the adjustment of the salary income expense deduction amount for individual income tax (also known as the individual income tax threshold). The current salary income expense deduction amount for individual income tax in our country is 2000 yuan. When taxpayers pay their individual income tax, they subtract the "three insurances and one fund" from their monthly salary income, then deduct another 2000 yuan threshold, and finally multiply by the corresponding tax rate to get the payable tax amount.
According to reports, the individual income tax threshold in our country has been adjusted twice before. The first time was in 2006 when the exempted amount was raised from 800 yuan to 1600 yuan. The second time was in 2008 when it was adjusted from 1600 yuan to 2000 yuan.
In the past few months, there have been various rumors about the adjustment of the salary income expense deduction amount for individual income tax (i.e., the threshold). Some suggested 2500 yuan, others proposed 3000 yuan. During this year's National People's Congress, many representatives called for the threshold to be adjusted to 5000 yuan.
According to China Securities News, the salary income expense deduction amount for individual income tax is expected to be adjusted to 3000 yuan. Based on the information obtained by the finance channel of China News Service from several authoritative sources, adjusting the threshold to 3000 yuan seems more credible.
The progressive tax rate will be adjusted from 9 levels to 7 levels. Currently, our country implements a 9-level progressive tax rate, with rates ranging from 5% to 45%, divided into 9 levels. The first level is the portion not exceeding 500 yuan after deducting the threshold, corresponding to a 5% tax rate; the second level is the portion exceeding 500 yuan to 2000 yuan after deducting the threshold, corresponding to a 10% tax rate; the third level is the portion exceeding 2000 yuan to 5000 yuan after deducting the threshold, corresponding to a 15% tax rate. And so on, the last level is the portion exceeding 100,000 yuan after deducting the threshold of 2000 yuan, corresponding to a 45% tax rate.
This revision of the individual income tax law will reform the 9-level progressive tax rate. According to information obtained by the finance channel of China News Service from authoritative departments, this revision of the individual income tax law may adjust the current 9-level progressive tax rate for salaries to 7 levels, possibly eliminating the 15% and 40% tax brackets. As for the detailed plan for the adjustment of levels, there is currently no definitive information, and it still needs to be announced by authoritative departments.
Some experts estimate that due to the increase in the threshold and the adjustment of tax rates, the national individual income tax revenue may decrease by about 120 billion yuan. Data shows that the total individual income tax revenue nationwide in 2010 was approximately 480 billion yuan. Clearly, after the completion of this revision of the individual income tax law, the national individual income tax revenue will significantly decrease. This will correspondingly cause some problems that need to be effectively addressed by relevant state departments.
If passed in the second review, it will be implemented as early as the second half of the year. According to reports from China National Radio, after multiple discussions and revisions, the "Amendment Draft of the Individual Income Tax Law of the People's Republic of China" will undergo its first review at the 20th session of the Standing Committee of the 11th National People's Congress, held from April 20 to 22. If smoothly passed, it will undergo the second review at the end of June, and if passed in the second review, it will be promulgated and implemented as early as the second half of the year.
On April 20, according to China News Service, the 20th session of the Standing Committee of the 11th National People's Congress convened today. According to the schedule, the meeting will deliberate on the "Amendment Draft of the Individual Income Tax Law of the People's Republic of China" and other bills over the three days from the 20th to the 22nd. According to multiple authoritative media reports, the salary income expense deduction amount for individual income tax is expected to be adjusted to 3000 yuan, and the tax rate structure will be adjusted from a 9-level progressive tax rate to a 7-level progressive tax rate.