The additional deduction refers to the amount of taxable income that can be deducted according to a certain proportion calculated according to the actual tax paid by the taxpayer and the amount of deductions that meet the requirements when filing individual income tax. The specific calculation method is as follows:
1. Determine the taxable income
Taxable income refers to the balance of the total income obtained by the taxpayer from various **, minus the prescribed deduction standard for expenses. According to the Individual Income Tax Law of the People's Republic of China, the taxable income of the comprehensive income of resident individuals in 2021 is within the range of RMB 5,000 to RMB 20,000 per month, and the tax rate is 3% to 45%.
2. Calculate the additional deduction
The formula for calculating the additional deduction is as follows:
Additional Deduction = Actual Individual Income Tax Paid - Deduction Limit Applicable Tax Rate
Among them, the actual individual income tax paid refers to the total individual income tax actually paid by the taxpayer;The deduction limit refers to the expenses that can be deducted in accordance with the tax law, including basic pension insurance premiums, basic medical insurance premiums, unemployment insurance premiums, etc.;The applicable tax rate is the range of tax rates determined based on the taxable income of the taxpayer.
3. Determine the method of use of additional deductions
There are two ways to use the additional deduction: one is direct deduction and the other is refund. If the taxpayer actually pays less tax in the current year than the additional credit, the additional credit can be directly used to offset the taxable income of the current yearIf the taxpayer actually pays more tax in the current year than the additional credit, he can apply for a refund of the excess amount.
4. Precautions
1.The additional deduction is only applicable to resident individuals, and non-resident individuals are not eligible for this preferential policy.
2.If a taxpayer has more than one income** at the same time, the additional deduction for each income needs to be calculated separately and used in order.
3.For high-income earners, due to their higher taxable income, the additional deduction may not be enough to offset the full taxable income, so other tax incentives need to be considered.