Childcare subsidies exempt from individual income tax

Childcare subsidies that parents receive in accordance with the national childcare subsidy policy are exempt from individual income tax, according to a notice jointly released by the Ministry of Finance and the State Taxation Administration on Friday.

Children in a kindergarten in Longhua District learn to play the chess. Photo from Dute News

The notice clarifies that childcare subsidies disbursed under the rules of the designated subsidy policy will not be treated as taxable personal income. The exemption has taken effect retroactively from Jan. 1, 2025.

To ensure smooth implementation, the health authorities will establish an information-sharing mechanism with the finance and tax departments. Under the new arrangement, county-level health bureaus are responsible for assisting subsidy applicants by filing personal income tax exemption declarations on their behalf.

The cross-departmental data exchange is intended to streamline administration, reduce paperwork for beneficiaries and ensure that eligible families receive the tax exemption without additional burdens. The measure is expected to simplify compliance for local tax offices and improve the targeting and delivery of support.