The calculation of annual tax deduction is mainly carried out in accordance with the Individual Income Tax Law and its implementing regulations. The specific calculation steps are as follows:
Determination of taxable income: Taxable income refers to the balance of various incomes obtained by an individual in a tax year minus the deductions stipulated in the tax law. The deduction items include basic deduction expenses, special deductions, special additional deductions, etc.
Determination of the applicable tax rate: Determine the applicable tax rate corresponding to the taxable income according to the tax rate table stipulated in the individual income tax law. The tax rate table sets different tax rates according to the different brackets of income.
Calculate the amount of tax payable: The amount of tax payable is equal to the amount of taxable income multiplied by the applicable tax rate minus the quick deduction. The quick deduction is a fixed value set to simplify the calculation process.
Tax exemption and tax credit: According to the Individual Income Tax Law and related policies, some income can enjoy tax exemption or tax reduction. At the same time, part of the tax that has been paid by the individual in a year can also be credited against the tax payable.
Calculate the actual tax payable: The actual tax payable is equal to the tax payable minus the tax deduction and tax credit.
Illustrated with examples. Assuming that Mr. Zhang obtains a salary income of 200,000 yuan in 2023, the special deduction is 50,000 yuan, and the special additional deduction is 30,000 yuan, and there is no other income and deduction items. The calculation process of Mr. Zhang's annual tax deduction is as follows:
Taxable income = 200,000 yuan - 50,000 yuan - 30,000 yuan - 60,000 yuan (basic deduction of expenses) = 60,000 yuan.
According to the tax rate table, the applicable tax rate corresponding to 60,000 yuan is 10%, and the quick deduction is 2,520 yuan.
Tax payable = 60,000 yuan 10%-2,520 yuan = 3,480 yuan.
Assuming that Mr. Zhang has no other tax deductions and deductions, the actual tax payable is equal to the tax payable, i.e. RMB 3,480.
Relevant Regulations. When calculating the annual tax deduction, the following regulations need to be followed:
Individual Income Tax Law of the People's Republic of China: This law stipulates the scope, tax rate, deduction items and other contents of individual income tax, which is the legal basis for the calculation of annual tax deduction.
Regulations on the Implementation of the Individual Income Tax Law of the People's Republic of China: The Regulations provide detailed provisions on the specific implementation of the Individual Income Tax Law, including the calculation method of taxable income, the determination of the applicable tax rate, and the accounting of tax reductions and exemptions.
Announcement and notice of the State Administration of Taxation on individual income tax: The State Administration of Taxation will issue relevant announcements and notices to adjust and improve the individual income tax policy according to the economic and social development situation and the needs of individual income tax collection and administration. These announcements and notices are also an important basis for making annual deduction calculations.
Summary. The calculation of annual tax deduction is one of the core contents of individual income tax, which is related to everyone's vital interests. Understanding how annual tax deductions are calculated and regulations can help us better plan our finances and ensure that we pay our taxes in accordance with the law. At the same time, we should also pay attention to the relevant announcements and notices of the State Administration of Taxation on individual income tax, and keep abreast of policy changes in order to better enjoy preferential tax policies.