China Annual IIT Reconciliation in 2025: Everything You Need to Know

Annual IIT reconciliation for the year 2024 is required to be made during the period from March 1 to June 30, 2025. Starting from March 21, taxpayers can make the final tax settlement directly without requiring a prior appointment.

Annual IIT reconciliation, or annual IIT settlement, is a process applied to individual taxpayers on their comprehensive income (an individual’s combined income of wages and salaries, remuneration from labor services, author’s remuneration, and royalties), to make sure their IIT paid in the previous tax year is accurate.

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Under China’s tax laws and regulations, resident taxpayers should complete the annual IIT reconciliation process from March 1 to June 30, regardless of whether they are Chinese or foreigners.

During the process, individual taxpayers will need to recheck their IIT paid and deducted in the tax year, calculate the refundable or supplementary tax payable, report to the tax authorities, and make the tax settlement.

In this article, we introduce key issues related to the annual IIT reconciliation in 2025 and frequently asked questions for the settlement.

What will be settled in the annual IIT reconciliation in 2025?

After the end of the year 2024, a resident individual is required to consolidate his/her four types of comprehensive income, namely wages and salaries, remuneration for personal services, author’s remuneration, and royalties obtained from January 1 to December 31, 2024, to compute the final tax payable amount. The taxpayer needs to deduct the prepaid tax amount in 2024 to obtain the tax refundable or the tax to be made up amount. Further, the taxpayer is required to declare to tax authorities for a tax refund or tax to be made up.

Tax Refundable or Tax to Be Made Up = [(Annual Comprehensive Income – RMB 60,000- Special Deductions – Special Additional Deductions – Other Deductions Determined Pursuant to the Law – Qualified Public Welfare And Charitable Donations) × Applicable Tax Rate – Quick Deduction] – Prepaid Tax Amount

For more about IIT calculation, please refer to our portal guide here.

Who needs to make an annual IIT reconciliation in 2025?

A resident taxpayer who falls into either any of the following circumstances is required to carry out annual IIT reconciliation:

• Where the prepaid tax amount exceeds the tax payable amount in the final settlement and the taxpayer applies for a tax refund; or
• Where the comprehensive income obtained in 2024 exceeds RMB 120,000 (approx. US$16,700), and the tax amount to be made up in the final settlement exceeds RMB 400 (approx. US$56).

Resident taxpayers refer to taxpayers having a domicile in China (usually domestic employees) and taxpayers having no domicile in China but having stayed or expected to stay in China for at least 183 days in a calendar year (usually foreign employees).

Where a taxpayer failed to declare or under-declare his/her comprehensive income for the year 2024 due to an error in the application of an income item or failure of the withholding agent to perform its withholding obligation, he or she is required to make a final settlement truthfully according to the law.

Meanwhile, there are some circumstances under which the annual IIT reconciliation can be exempted, including:

• Where the taxpayer has to make up tax in the final settlement, but his/her comprehensive income does not exceed RMB 120,000 in the year;
• Where the tax amount to be made up does not exceed RMB 400 in the final settlement;
• Where the prepaid tax amount is consistent with the tax payable amount in the final settlement; and
• Where the taxpayer satisfies the criteria for a tax refund in the final settlement but does not apply for a tax refund.

What are the available pre-tax deductions that can be made during the annual IIT reconciliation?

A taxpayer may deduct or make supplementary deductions for the following pre-tax deductions occurring in 2024 during the annual IIT reconciliation period:

• Standard deduction: RMB 600,000.
• Special deductions: Qualified social insurance premiums (such as basic pension insurance premiums, basic medical insurance, and unemployment insurance) and housing fund.
• Special additional deductions: Deductions for expenses on nursing of children under three years old, children’s education, continuing education, serious illness, housing mortgage interest, supporting the elderly, and housing rent.
• Other deductions such as qualified enterprise annuity and occupational annuity, commercial annuity, commercial personal health insurance, and personal pensions.
• Qualified donations to public welfare and charitable donations.

What are the available methods for making annual IIT reconciliation in 2025?

There are three methods for taxpayers to make annual IIT reconciliation in 2025:

• Completing the formalities on his/her own;
• Having his/her employer complete the formalities on his/her behalf; and
• Entrusting others, including specialized tax service agencies or other individuals and organizations to complete the formalities.

For those who want to deal with the annual IIT reconciliation via the employer, the individual taxpayers usually need to let the employer know their choice and confirm the authenticity, accuracy, and completeness of relevant information that they have provided for the annual IIT reconciliation.

For those who want to deal with the IIT reconciliation through an entrusted party, the entrusting party (individuals) and the entrusted party (professional tax service agencies, other units, or other individuals ) need to sign a power of attorney, which stipulates the specific entrust matter.

For more details about the requirements and procedures of the three methods for annual IIT reconciliation, please read our article here.

What are the channels for making annual IIT reconciliation?

IIT reconciliation via the IIT app or the e-tax system

The IIT app (个人所得税app) is a mobile application of the official tax management and individual tax declaration system launched by the STA in 2019. After real-name registration, individual taxpayers can fill out special additional deduction information, download tax payment records, and make annual tax reconciliations, among others.

The e-tax system, also called “Online Tax Bureau for Natural Persons” (自然人电子税务局), is the web version of the IIT app, which is also developed and managed by the STA and offers similar functions to the IIT app.

During the annual IIT reconciliation period, i.e., March 1 to June 30, the IIT App and the e-tax system will open the IIT reconciliation function and individual taxpayers will be able to declare the IIT return for the previous year.

IIT reconciliation by mail or at a tax service office

Where it is inconvenient to complete the formalities through the aforesaid channels, taxpayers may complete the formalities by mail or at a tax service office.

Those who opt for mail for the formalities are required to mail his/her tax returns to the address announced by the provincial-level tax authority.

How to deal with equity incentives in annual IIT reconciliation?

Organizations that grant equity (stock) incentives (including equity incentives granted by a domestic enterprise to its employees with shares in an overseas enterprise as the subject matter) and cash incentives for commercialization of service technological achievements etc. shall complete reporting and filing formalities according to the relevant provisions.

At the same time, if a taxpayer obtains equity incentives from the same employer on multiple occasions within a tax year, the employer shall compute and withhold tax on a consolidated basis.

If a taxpayer obtains equity incentives from different employers within a tax year, he/she may provide the relevant information on equity incentives obtained from his/her previous employer to his/her current employer, which shall compute and withhold tax on a consolidated basis, or complete consolidated filing of tax return with taxation authorities between 1 March and 30 June of the following year.

How is the tax authority in charge of the annual IIT reconciliation decided?

Where the taxpayer has an employer, the tax authority for accepting the annual IIT reconciliation is the competent tax authority for the employer, regardless of the method chosen for the IIT reconciliation. Where the taxpayer has more than one employer, the IIT reconciliation can be made to the tax authority for any of the employers.

Where a taxpayer does not have an employer, the annual IIT reconciliation shall be filed with the competent taxation authorities for the location of his/her household registration, habitual residence, or the main source of his/her income.

How to make a tax refund or make up underpaid tax?

A taxpayer applying for a tax refund in the settlement shall provide a qualified bank account opened within the territory of China. The tax authorities shall, upon examination and verification according to the provisions, process the tax refund from the treasury according to the relevant provisions on treasury administration.

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A taxpayer completing retrospective tax payment formalities may pay tax through online banking, by card payment at the POS terminal of the tax service hall, at a bank counter, or via a non-bank payment organization. Where a tax return is mailed and retrospective tax payment is made, the taxpayer shall promptly monitor declaration progress and pay tax through the IIT APP and e-tax website or the tax service office of the competent tax authorities.

For more frequently asked questions regarding tax refund and tax owed payment, please read our China Briefing article: China Annual IIT Reconciliation – Your Tax Refund FAQs Answered and  China Annual IIT Reconciliation – Your Tax Owed Payment FAQs Answered

What are the important timelines for making IIT reconciliation?

In 2025, the IIT reconciliation will be divided into two phases:

• Phase I: IIT reconciliation during the period between March 1 to March 20, 2025; and
• Phase II: IIT reconciliation during the period between March 21 to June 30, 2025.

For taxpayers who need to make the annual IIT reconciliation during phase I, they need to make an appointment through the IIT App on any day during the aforesaid timeframe after February 21 (6:00-22:00). Taxpayers who plan to make the IIT reconciliation after March 21 do not need to make an appointment.

What are the changes to the annual IIT reconciliation in 2025?

China’s new IIT reconciliation rules, effective February 26, 2025, introduce procedural refinements, enhanced taxpayer services, and stricter compliance measures. While the overall framework remains consistent with previous years, notable updates include:

• Extended tax filing flexibility: Taxpayers who cannot complete their annual IIT reconciliation on time may apply for an extension before the deadline (June 30). If approved, they must prepay taxes based on the previous year’s reconciliation or an amount determined by tax authorities and finalize the reconciliation within the granted extension period.
• Simplified refund process: Individuals earning RMB 60,000 or less annually who have prepaid IIT can apply for a one-click refund via the IIT app or website.
• Priority refunds for taxpayers with high financial burdens: Taxpayers facing significant expenses, such as major medical treatments or elderly care responsibilities, will have access to an expedited refund channel.
• Clarified reporting rules for foreign income: Foreign-sourced income must be reported based on actual earnings. If the tax year in the foreign jurisdiction differs from China’s, the last day of the foreign tax year will be aligned with China’s calendar year for reporting purposes.
• Stronger compliance enforcement:
  • First-time offense leniency: Taxpayers who make errors in their filings but proactively correct them may be exempt from penalties.
  • Credit consequences for non-compliance: False declarations and failure to pay owed taxes will impact personal and business credit records. Related enterprises may also face tax credit implications.
  • Employer liability for misconduct: Companies that facilitate fraudulent filings or fail to fulfill reporting duties may see their corporate tax credit ratings affected.

These updates streamline processes and enhance taxpayer services but also impose stricter compliance requirements. Taxpayers are advised to verify their IIT app details, retain deduction proof, and ensure timely and accurate filings to avoid penalties and credit risks.

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