① In the payment stage, individuals contribute to the Individual Retirement Account according to the limit standard of 12,000 yuan/year, which can be deducted based on actual income from comprehensive income or Operational income; ② In the investment stage, no personal income tax will be levied on the investment income counted in the Individual Retirement Account.
According to the announcement from the Ministry of Finance on December 13, starting from January 1, 2024, a deferred tax preferential policy for Individual Retirement Accounts will be implemented nationwide.
In the payment stage, individuals contribute to the Individual Retirement Account according to the limit standard of 12,000 yuan/year, which can be deducted based on actual income from comprehensive income or Operational income.
In the investment stage, no personal income tax will be levied on the investment income counted in the Individual Retirement Account.
In the disbursement stage, individuals' received retirement funds will not be included in comprehensive income and will be calculated separately for personal income tax at a rate of 3%, with the paid tax counted under the "wages and salary income" item.
Announcement on the implementation of preferential personal income tax policies for Individual Retirement Accounts nationwide.
Announcement No. 21 of 2024 from the Ministry of Finance and the State Administration of Taxation.
According to the "Notice on the Comprehensive Implementation of the Individual Retirement System by the Ministry of Human Resources and Social Security, the Ministry of Finance, the State Administration of Taxation, the Financial Supervision Administration, and the China Securities Regulatory Commission" (Human Resources and Social Security Department Document [2024] No. 87), the Individual Retirement System will be fully implemented starting from December 15, 2024. The following is the announcement regarding the preferential personal income tax policy for Individual Retirement Accounts.
1. Starting from January 1, 2024, a personal Retirement deferred tax incentive policy will be implemented nationwide. During the contribution phase, contributions made by individuals to their personal Retirement Account will be deducted according to an annual limit of 12,000 yuan from their comprehensive income or operating income; during the investment phase, investment income credited to the personal Retirement Account will not be subjected to individual income tax; during the withdrawal phase, the personal Retirement amount received by individuals will not be included in comprehensive income and will be taxed separately at a rate of 3%, with the tax amount included in the category of 'wages and salary income.'
2. When enjoying the pre-tax deduction for personal contributions, individuals should use the deduction certificate issued by the personal Retirement information management service platform as the tax deduction proof. For those receiving wages, salary income, and individual income tax withheld according to the cumulative withholding method for labor remuneration income, contributions can be deducted within the limit standard either during the year of withholding or during the next year's tax reconciliation. For those who choose to withhold during the current year, relevant certificates should be timely provided to the withholding unit. The withholding unit shall handle the pre-tax deduction matters for taxpayers according to the relevant requirements of this announcement. Contributions from other labor remuneration, manuscript remuneration, royalties, or operating income can be deducted during the next year's tax reconciliation within the limit standard. When individuals receive personal Retirement according to regulations, the Banks in the city where the personal Retirement Account is opened will withhold and pay the individual income tax that is due.
3. The human resources and social security department and the tax department should establish an information exchange mechanism to transfer tax-related information concerning personal Retirement to the tax department via the personal Retirement information management service platform and cooperate with the tax department to effectively manage related tax collection work.
4. The relevant branches of commercial Banks should promptly conduct full details of tax declaration for taxpayers who have opened personal Retirement Accounts at their banks to ensure that the information is true and accurate.
5. Departments at all levels for finance, human resources and social security, taxation, financial regulation, etc., should closely cooperate and work diligently on the organization and implementation; if any difficulties or issues arise during the implementation of this announcement, they should be reported promptly to the higher authorities.
6. The 36 pilot cities (regions) for the personal Retirement policy will uniformly implement the provisions of this announcement from the date it is published.
This announcement is hereby made.
Ministry of Finance National Taxation Administration
December 12, 2024.
Editor/Rocky
