2026 H1 Individual Income Tax Revenue RMB 900 Billion, Up 13%; High-Income Group Contributes Over Half
China's individual income tax (IIT) revenue reached RMB 900 billion in the first half of 2026, up 13% year-on-year, driven by capital gains, strong industry performance, and enhanced tax compliance. The top 1% of earners contributed over half of total IIT, while the top 10% accounted for about 90%. The government also announced a new tax on offshore trusts to curb avoidance by the wealthy.
In the first half of 2026, individual income tax (IIT) revenue reached RMB 900 billion, up about 13% year-on-year, making it the third-largest tax category in China. Wang Shiyu, chief auditor of the State Taxation Administration, disclosed at a press conference held by the State Council Information Office that the rapid growth of IIT was mainly due to three reasons: First, capital gains contributed nearly 50% of the IIT growth, with tax on restricted stock transfers surging 97.6% year-on-year and tax on interest, dividends, and bonuses rising 15.2% year-on-year. Second, the scientific research and technical services industry and the non-ferrous metal smelting and rolling processing industry showed good development, driving up employee incomes, with IIT paid by these sectors increasing by 15% and 40.8% year-on-year respectively. Third, tax authorities continued to strengthen tax guidance and compliance for high-income individuals, generating additional revenue effects.
High-income individuals have become the main contributors to IIT. Data show that the top 1% of earners by annual income declared and paid over 50% of total IIT, while the top 10% accounted for about 90%. The seventh annual IIT comprehensive income settlement showed that over 100 million taxpayers received tax refunds, with total refunds exceeding RMB 150 billion. Individuals with annual income below RMB 120,000, after deducting basic deductions, three social insurance funds and housing provident fund, and special additional deductions, basically need not pay tax or only a small amount; over 70% of people needed to pay no tax after the settlement. Among those who paid tax, over 60% were subject to the lowest 3% tax rate. The tax filing compliance rate for key individuals requiring large supplementary tax payments reached 99.96%. In the first half of 2026, tax authorities urged the payment of supplementary taxes and late fees totaling approximately RMB 34 billion.
On July 24, the Ministry of Finance and the State Taxation Administration issued an announcement to tax offshore trusts established by Chinese citizens and the income generated during their duration, in order to close a tax avoidance loophole long used by the wealthy for asset protection and wealth transfer.