Guide to Personal Income Tax Special Additional Deductions

1. Overview of Special Additional Deductions

Personal income tax special additional deductions refer to expense items closely related to people's lives that are allowed to be deducted when calculating the taxable income of personal income tax, in addition to the basic deduction and special deductions. The new personal income tax law implemented since January 1, 2019, introduced the special additional deduction system, aiming to reduce the tax burden on taxpayers and increase residents' disposable income.

1.1 Significance of Special Additional Deductions

The implementation of the special additional deduction system reflects the fairness and rationality of personal income tax reform, and can better reflect the actual burden level of taxpayers. Through targeted deduction policies, it reduces the burden on taxpayers in education, medical care, housing and other aspects, which is conducive to improving residents' consumption capacity and quality of life.

2. Children's Education Deduction

2.1 Deduction Standard

The relevant expenses for taxpayers' children receiving full-time academic education are deducted at a fixed standard of 1,000 yuan per child per month. Academic education includes compulsory education (primary and junior high school education), senior high school education (regular senior high school, secondary vocational, technical education), and higher education (junior college, undergraduate, master's, doctoral education).

2.2 Deduction Scope

Children's education deduction includes expenses for children receiving academic education both domestically and abroad. Children aged 3 to pre-school education stage are also deducted at the fixed standard of 1,000 yuan per child per month.

2.3 Deduction Method

Parents can choose to have one party deduct 100% of the deduction standard, or both parties can each deduct 50% of the deduction standard. The specific deduction method cannot be changed within a tax year.

3. Continuing Education Deduction

3.1 Academic (Degree) Continuing Education

Expenses for taxpayers receiving academic (degree) continuing education in China are deducted at a fixed amount of 400 yuan per month during the academic (degree) education period. The deduction period for the same academic (degree) continuing education cannot exceed 48 months.

3.2 Vocational Qualification Continuing Education

Expenses for taxpayers receiving skill personnel vocational qualification continuing education and professional technical personnel vocational qualification continuing education are deducted at a fixed amount of 3,600 yuan in the year when the relevant certificate is obtained.

3.3 Deduction Method

For personal acceptance of undergraduate or lower academic (degree) continuing education, if the deduction conditions are met, it can be chosen to be deducted by the parents or by the individual.

4. Housing Loan Interest Deduction

4.1 Deduction Standard

If the taxpayer or the spouse individually or jointly uses commercial bank or housing provident fund personal housing loan to purchase housing in China for themselves or their spouse, the first housing loan interest expense incurred shall be deducted at a fixed standard of 1,000 yuan per month in the year when the loan interest is actually incurred, and the deduction period shall not exceed 240 months at most.

4.2 Deduction Conditions

The term "first housing loan" as mentioned in these measures refers to a housing loan for which the purchase of housing enjoys the first housing loan interest rate. Taxpayers can only enjoy the interest deduction for the first housing loan once.

4.3 Deduction Method

Through agreement between the husband and wife, one party can be chosen to deduct. The specific deduction method cannot be changed within a tax year. For the first housing loan interest expenses incurred by the husband and wife before marriage when they purchased houses separately, after marriage, they can choose one of the purchased houses, and the purchaser can deduct 100% of the deduction standard, or the husband and wife can each deduct 50% of the deduction standard for the houses they purchased separately. The specific deduction method cannot be changed within a tax year.

5. Housing Rent Deduction

5.1 Deduction Standard

Housing rent expenses incurred by taxpayers who do not have their own housing in the main working city can be deducted at the following fixed standards:

5.2 Deduction Conditions

If the taxpayer's spouse has their own housing in the taxpayer's main working city, it shall be deemed that the taxpayer has their own housing in the main working city. If the husband and wife have the same main working city, only one party can deduct the housing rent expense.

5.3 Deduction Method

Housing rent expenses shall be deducted by the lessee who signs the housing lease contract. Taxpayers and their spouses cannot enjoy both housing loan interest and housing rent special additional deductions separately in the same tax year.

6. Elderly Support Deduction

6.1 Deduction Standard

The support expenses for taxpayers supporting one or more dependents shall be uniformly deducted at the following fixed standards:

• If the taxpayer is an only child, the deduction is at a fixed standard of 2,000 yuan per month
• If the taxpayer is not an only child, the deduction amount of 2,000 yuan per month shall be shared with siblings, and the amount shared by each person cannot exceed 1,000 yuan per month

6.2 Deduction Scope

Dependents refer to parents aged 60 or above, and grandparents or maternal grandparents aged 60 or above whose children have all passed away.

6.3 Deduction Method

The sharing methods include average sharing, designated sharing by the dependent, or agreed sharing by the supporters. The specific sharing method and amount cannot be changed within a tax year.

7. Major Illness Medical Expense Deduction

7.1 Deduction Standard

Within a tax year, the part of the medical expenses paid by the taxpayer related to basic medical insurance, after deducting medical insurance reimbursement, that exceeds 15,000 yuan (referring to the self-paid part within the medical insurance catalog) can be deducted by the taxpayer when handling the annual final settlement, with a limit of 80,000 yuan.

7.2 Deduction Scope

Medical expenses incurred by the taxpayer can be chosen to be deducted by the taxpayer or their spouse; medical expenses incurred by minor children can be chosen to be deducted by either parent.

7.3 Deduction Method

Major illness medical expense deduction is deducted when handling the annual final settlement from March 1 to June 30 of the following year. Taxpayers shall keep the original (or copy) of medical service charges and medical insurance reimbursement related bills for future reference.

8. Declaration Methods and Precautions

8.1 Declaration Methods

Taxpayers can declare special additional deductions through the following methods:

• Declaration through Personal Income Tax APP
• Declaration through Natural Person Electronic Taxation Bureau web portal
• Fill in the paper "Personal Income Tax Special Additional Deduction Information Form" and submit it to the employer
• Declaration during annual final settlement

8.2 Precautions

Taxpayers need to keep relevant materials for future reference, with a retention period of five years. Specifically including:

• Children's education: If the child receives education overseas, the taxpayer shall keep relevant educational proof materials such as overseas school admission notices and study visas
• Continuing education: Vocational qualification related certificates and other materials
• Housing loan interest: Housing loan contracts, loan repayment expenditure vouchers and other materials
• Housing rent: Housing lease contracts or agreements and other materials
• Elderly support: Written sharing agreements for agreed or designated sharing and other materials
• Major illness medical expenses: Original or copy of medical service charges and medical insurance reimbursement related bills, or medical expense lists for the tax year issued by medical security departments

Conclusion and Recommendations

Through the systematic analysis of this research report, we can draw the following core conclusions:

1. Special additional deductions are an important tax preferential policy: Taxpayers should fully understand the standards and conditions of various deductions, and declare in a timely manner to enjoy tax preferences.
2. Accurate declaration is key: Taxpayers should truthfully fill in special additional deduction information, keep relevant materials for future reference, and avoid tax risks caused by false information.
3. Reasonable planning can maximize tax benefits: Taxpayers can reasonably choose deduction methods according to their own circumstances to maximize tax benefits.
4. Timely attention to policy changes: Tax policies may be adjusted according to economic and social development, and taxpayers should pay attention to policy changes in a timely manner to ensure compliant declaration.

Given the professionalism and complexity of personal income tax special additional deductions, it is recommended that taxpayers consult professional tax advisors when encountering questions during the declaration process. Shenyu Consulting has an experienced team of tax professionals that can provide personalized tax planning solutions and comprehensive consulting services for clients with different needs.