The number in your contract and the number in your bank account never match — social insurance and income tax live in between. Understand the pipeline and every line on your payslip makes sense.
Three Steps From Gross to Net
- Deduct social insurance + housing fund: employee share is roughly 8% pension, 2% medical, 0.5% unemployment, 5-12% housing fund (varies by city).
- Compute taxable income: gross − 5,000 standard deduction − social insurance − special additional deductions (children's education, mortgage interest, elderly care — 1,000-2,000/month each).
- Apply the bracket table: multiply by the rate and subtract the quick deduction.
Monthly Withholding Brackets (Top Three)
| Taxable income (monthly) | Rate | Quick deduction |
|---|---|---|
| up to 3,000 | 3% | 0 |
| 3,000-12,000 | 10% | 210 |
| 12,000-25,000 | 20% | 1,410 |
Example: gross 12,000; insurance ≈ 2,400; special deductions 1,500. Taxable = 12,000 − 5,000 − 2,400 − 1,500 = 3,100 → 10% bracket → tax = 3,100 × 10% − 210 = 100. Net ≈ 9,500.
Amounts in Words: The Invoice Hard Rule
- Digits map to formal characters (yi, er, san…), plus shi, bai, qian, wan, yi for places.
- If no cents follow the jiao digit, append 'zheng' (exact): ¥1680.00 becomes 'one-thousand six-hundred eighty yuan exact'.
- Zeros must be written where they occur; consecutive zeros collapse into one — the wording exists to prevent tampering.
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FAQ
How should the annual bonus be taxed?
Current policy lets you choose: tax the bonus separately (monthly table) or merge it into annual income. High bonus + low salary usually favors separate; compute both and pick.
Why does net pay drop later in the year?
Cumulative withholding: early months sit in lower brackets, and as cumulative income grows the effective bracket rises — same annual tax, uneven monthly take-home.