Annual IIT Reconciliation Complete Guide 2026

Every year from March 1 to June 30 is the filing window for China's annual individual income tax (IIT) reconciliation on comprehensive income. Some people get refunds of thousands or even tens of thousands of yuan — like found money; others owe tax due of tens of thousands, which stings. Why does this "refund more, pay the difference" happen? Who must file, and who can skip it? How should the 7 special additional deductions be filled in to save the most tax? When it comes to the year-end bonus, is "separate taxation" or "combined taxation" more cost-effective? This article explains all of these questions thoroughly, plus a 7-step illustrated checklist for the IIT App — follow it and you can complete the reconciliation.

1. What Is Annual IIT Reconciliation?

The annual reconciliation of comprehensive income (shortened to "annual reconciliation") is the process in which a resident individual, after a natural year ends, combines the 4 types of comprehensive income received during the year to compute the full-year IIT payable, subtracts the tax already withheld and prepaid monthly or per occurrence, files the annual return with the tax authority, and settles any tax refund or tax due.

The 4 Types of Comprehensive Income Included in the Reconciliation (All Required)

• Wages and salaries: the main income source for most people, withheld and paid monthly by the employer.
• Labor remuneration: e.g., part-time work, consulting, lecturing, design, translation, and self-media content collaboration, typically withheld by the payer at a rate of 20%–40%.
• Author's remuneration: income from articles published in formal publications, books, or newspapers, withheld at 20% and counted into the income amount at 70%, for an effective withholding rate of 14%.
• Royalties: income from licensing patent rights, trademark rights, copyrights (other than author's remuneration), non-patented technology, etc., withheld at a rate of 20%.

After the 4 income items above are combined, the full-year tax payable is recalculated using the 7-bracket progressive tax rates from 3% to 45%. Interest and dividends, property leasing, property transfers, incidental income (e.g., lottery winnings), and business income are not included in the annual comprehensive income reconciliation.

Why "Refund or Top Up"?

The root cause is: the rules for monthly withholding are different from the rules for annual combined taxation. For example:

• If you had 1–2 months without salary during the year (resignation or a gap period), you under-used the RMB 5,000 monthly threshold 1–2 times in withholding; after annual reconciliation, you can fully use the RMB 60,000 threshold, and the over-withheld tax is refunded;
• Labor remuneration, author's remuneration, and royalties are withheld at a minimum rate of 20%, but under combined taxation your comprehensive income tax rate is only 3% or 10%; the rate difference becomes a tax refund;
• If you switched jobs mid-year, the new employer recalculates withholding from the lowest bracket as if it were your first salary of the year, leaving the monthly withholding insufficient, and you end up owing tax due after the year-end reconciliation;
• If special additional deductions were not declared, declared incorrectly, or missed during withholding, filling them in during the reconciliation results in a tax refund.

2. Who Must File / Who Is Exempt?

Who Must File the Annual Reconciliation (Either Condition Triggers It)

• Tax already withheld > tax payable as reconciled (resulting in a tax refund), and you apply for the refund (a refund is your right — you may voluntarily forgo it);
• 2026 annual comprehensive income > RMB 120,000 and tax due ≥ RMB 400 (you must file and pay; otherwise you face late fees and credit-consequences).

Who Does Not Need to File (3 Situations)

• Tax due ≤ RMB 400 (even if income exceeds RMB 120,000, tax due within RMB 400 is waived — a policy benefit);
• Annual comprehensive income ≤ RMB 120,000 (exempt from filing regardless of how much tax is due, but you may still actively apply for a refund);
• Tax already withheld = tax payable as reconciled, or you do not apply for a refund.

The above are the exemption policy criteria continued for 2025–2026; for the specific exemption conditions and calculation standards, refer to the latest announcements of the State Taxation Administration for the relevant year.

3. Filing Window: March 1 – June 30 of the Following Year

The filing period for the annual reconciliation is fixed: March 1 to June 30 of the year following the end of the previous tax year, 4 months in total. For example, to complete the 2025 comprehensive income annual reconciliation, the window is March 1, 2026 – June 30, 2026.

There is an important appointment mechanism in this window:

• March 1 – March 15 (the "reconciliation peak period"): taxpayers who need to file must book an appointment via the IIT App starting February 16 (usually), choosing one day between March 1 and 15. Users without an appointment cannot file directly between March 1 and 15 and must wait until after March 16.
• March 16 – June 30: no appointment needed; you can log in to the IIT App and file at any time.
• Deadline: June 30: if you miss the filing or fail to pay the tax due, a late fee of 0.05% per day accrues from July 1.

2026 Standard Table for the 7 Special Additional Deductions (7×4)

Special additional deductions directly reduce your taxable income; filled in correctly, they are often the source of a "refund of several thousand yuan". The following are the 7 deduction standards in effect when filing the 2025 annual reconciliation in 2026 (subject to the latest criteria of the State Taxation Administration):

4. Common Tax Refund Situations (with 3 Worked Examples)

Generally speaking, as long as the total IIT actually withheld exceeds the tax payable in the annual reconciliation, a tax refund is generated. Common situations include:

• Full-year comprehensive income below RMB 60,000, but monthly wages exceeded the threshold and IIT was withheld (e.g., a high single-month annual bonus caused withholding);
• Switched jobs mid-year: no salary during the gap period after leaving, but the RMB 5,000/month threshold should be shared across the whole year;
• Income from labor remuneration, author's remuneration, or royalties, where the withholding rate of 20%+ is higher than the actual annual comprehensive tax rate;
• Special additional deductions were not declared or not fully utilized during the withholding stage (e.g., children's education, housing loan interest, and infant care were only added at year-end);
• Qualifying serious illness medical expenses (deductible only in the annual reconciliation);
• Qualifying charitable or public welfare donations (donations made through official channels can be deducted proportionally before tax);
• Freelancers earn labor remuneration with no salary to progressively consume the RMB 60,000 threshold over the months.

Example 1: A 3-Month Gap in the Middle of the Year

Mr. Zhang earned RMB 15,000/month from January to March 2025 (with tax withheld from his after-tax salary), resigned in April for a career change and had a 3-month gap, then rejoined in July at the same RMB 15,000/month salary — working 9 months in total with comprehensive income of about RMB 135,000 (excluding three insurances, the housing fund, and special additional deductions). After the annual reconciliation: RMB 60,000 threshold + three insurances and housing fund + RMB 24,000 children's education + RMB 12,000 housing loan interest = a full-year taxable income of about RMB 20,000 after deductions, requiring only about RMB 600 in IIT; monthly withholding totaled about RMB 3,000, so the estimated refund is about RMB 2,400.

Example 2: A Freelancer with Labor Remuneration

Ms. Li is an independent designer with no fixed job in 2025, earning RMB 120,000 in labor remuneration for the year. When the payer withheld at the 20% rate: 120000 × (1 − 20%) × 20% = RMB 19,200. In the annual reconciliation, labor remuneration is included in comprehensive income at 80% — RMB 96,000 — then minus the RMB 60,000 threshold and the individual portion of three insurances / social security, the taxable income is only a bit over RMB 20,000, at the 3% rate, so the tax for the whole year is only about RMB 700, with an estimated refund of about RMB 18,500.

Example 3: Adding Infant Care Only at Year-End

Mr. Wang's second child was born in February 2025, but he never declared the "infant care (under 3)" deduction in the IIT App that year. Assuming his monthly salary is RMB 20,000 and annual comprehensive income is RMB 240,000, filling it in during the annual reconciliation gives: RMB 2,000/month × 11 months (February–December) = a RMB 22,000 pre-tax deduction. At the 20% tax bracket, the estimated refund is 22000 × 20% = about RMB 4,400.

5. Filing Channels: Choose 1 of 3

There are three official filing channels for the annual reconciliation, in the following recommended order:

1. Individual Income Tax App (Most Recommended — 99% of People Use This)

Officially produced by the State Taxation Administration, downloadable on both iOS and Android. Advantages:

• Automatically pulls in data such as your wages and salaries, labor remuneration, three insurances and housing fund, IIT already paid, and declared special additional deductions, avoiding manual entry errors;
• The system automatically calculates the refund / tax due amounts for accuracy;
• Refunds are paid directly to your linked Type-I bank card, usually arriving within 3–15 business days;
• Tax due can be paid via UnionPay, WeChat Pay, Alipay, and other methods.

2. Natural Person Electronic Tax Bureau (Web)

Visit "https://etax.chinatax.gov.cn" (the official Natural Person Electronic Tax Bureau website of the State Taxation Administration) and scan a QR code with the mobile IIT App to log in. The features are basically the same as the App, and it suits users who prefer working on a computer, need to cross-check pay slips, or want to export their IIT return as a PDF for records.

3. Tax Service Hall (In Person)

Go to the tax service hall window of the competent tax authority at your place of employment, registered residence (hukou), or habitual residence. This suits elderly taxpayers who are not comfortable with smartphones, or users with complex income situations (multiple labor remuneration sources, overlapping business income, foreign income credits, etc.) who need human assistance. It is recommended to book an appointment in advance.

6. The 7-Step Illustrated Checklist for the IIT App

The following is the standard 7-step process for completing the annual reconciliation through the Individual Income Tax App (using the 2025 annual reconciliation filed in 2026 as an example):

Step 1: Log In and Complete Real-Name Verification

Download the "Individual Income Tax" App (make sure it is the official "State Taxation Administration" version) and log in with your phone number + verification code / ID number. First-time users must complete real-name authentication via facial recognition. Before the annual reconciliation each year, check and update your employment information, bank card (a Type-I savings card in your own name), and phone number in the "Personal Center".

Step 2: Enter the "2025 Comprehensive Income Annual Reconciliation" Entry

On the home page, tap "Start Filing" on the prominent "2025 Comprehensive Income Annual Reconciliation" card; or enter via the "Tax Services → Comprehensive Income Annual Reconciliation" path. Select the filing year: 2025. If you enter between March 1 and 15, you must have booked an appointment in advance; unbooked users will see an appointment prompt — either follow the steps to book, or file after March 16.

Step 3: Choose How to Fill In the Return

There are two options here:

• Pre-filled return service (strongly recommended): the system automatically pre-fills data such as wages and salaries, labor remuneration, royalties, author's remuneration, three insurances and housing fund, and tax already paid that the employer has declared. 99% of ordinary taxpayers choose this — it is fast and accurate.
• Manual entry: suited to high-income or special-occupation users with income that is not pre-filled; you must enter each item by hand and cross-check the withholding certificates provided by the withholding agent.

Step 4: Confirm "Basic Information" and "Place of Employment"

Confirm that your name, ID number, and phone number are correct. Select the "reconciliation location" (place of employment / registered residence / habitual residence): those with an employer choose the "employer's location"; those without an employer choose the registered residence or habitual residence. The reconciliation location determines which level of tax authority reviews your refund.

Step 5: Check the 4 Income Items (Wages, Labor, Author's Remuneration, Royalties)

This is the most critical step. Tap "Total Income" one by one to view the details:

• Check whether the wages and salaries from January to December match your pay slips and bank deposits;
• Check the taxation method for the "annual one-time bonus" (year-end bonus): tap "Bonus present, please confirm in the details" next to the "Wages and Salaries" column, and switch between "separate taxation" and "combined taxation", calculating the refund / tax due for each (see the pros/cons section below), then choose the one that benefits you more;
• Labor remuneration, author's remuneration, and royalties: the App's pre-fill may have omissions; if you have paper withholding slips that the App does not show, tap "Add" to import or fill them in manually;
• If you find income filed under your name by someone else (an unfamiliar company declared wages using your identity): tap "Appeal" on that record directly; the tax authority will investigate, and the misappropriated income will not count toward your reconciliation.

Step 6: Check Deductions, "Carry Over with One Tap", and Add What Is Missing

Focus on checking the "basic deduction (RMB 60,000)", "special deductions (three insurances and housing fund)", "special additional deductions (7 items)", "other deductions", and "donations":

• Special additional deductions: tap "Special Additional Deductions" → "Go to Confirm", use the "carry over with one tap" feature to bring 2024 items that are still valid into 2025, then add items new for 2025 (e.g., a child turning 3 switches to children's education, buying a first home in 2025 and starting to repay the loan, obtaining a vocational qualification certificate in 2025, a parent turning 60 in 2025, etc.);
• Serious illness medical expenses: for the portion of 2025 out-of-pocket costs exceeding RMB 15,000, export the "Annual Expense Summary Query" data from the "National Medical Insurance Service Platform App" and fill it in manually;
• Donations: in 2025, donations to official channels such as the Red Cross, Project Hope, and disaster areas can be deducted proportionally before tax; enter the donation receipt number and amount.

Step 7: Submit the Return → Bank Card for Refund / Pay the Tax Due

After checking, tap "Next", and the system automatically calculates the "refund amount" or "tax due amount":

• Refund: tap "Apply for Refund", choose your linked Type-I savings card (make sure the card is in normal status to avoid a failed refund), submit it, then wait for the tax authority's review (usually 3–10 business days); the money arrives within 1–3 business days after approval;
• Tax due: if the amount due is ≤ RMB 400, tap "Enjoy Exemption from Filing" to waive it; if it is > RMB 400 or you choose to pay proactively, tap "Pay Tax Now" and select UnionPay / UnionPay QuickPass / WeChat Pay / Alipay to complete the payment;
• After submission, you can check the progress under "Services → Filing Query" and download the PDF return for your records.

7. Common Misconceptions and Tips

Year-End Bonus: Separate Taxation vs Combined Taxation (Decision Comparison)

For the year-end bonus (annual one-time bonus), you can still freely choose "separate taxation" or "taxation combined into comprehensive income" (subject to the latest policy validity of the State Council and the State Taxation Administration). This is the "decision" with the biggest impact for most salary earners — choosing right can save thousands or even tens of thousands.