Net Pay: Gross-to-Net Breakdown (Social Insurance + Tax)

Item

Employee %

Note

Pension

Statutory

Medical

+ ¥3 serious illness

Unemployment

0.2-0.5%

City varies

Housing fund

5% ~ 12%

Employer matches 1:1

Key Takeaways

Deduction stack: pension 8% + medical 2% + unemployment 0.2-1% + housing fund 5-12%, then income tax

Base rules: contributions use a base capped at 3× and floored at 0.6× local average wage — not always your actual salary

¥15k example: ~¥1,575 insurance + ¥1,800 fund + ~¥100-400 tax → net ≈ ¥11.3-11.8k

Employer cost: company adds ~25-30% on top of gross (their insurance/fund share)

Core answer: Net pay = gross salary − social insurance (employee share ~10.5%: pension 8% + medical 2% + unemployment 0.5%) − housing fund (5–12%, usually 12%) − individual income tax. On ¥10,000 gross in a 12%-fund city: deductions ≈ 10.5% + 12% = ¥2,250, taxable = 10,000 − 2,250 − 5,000 = ¥2,750 → tax ¥82.5 (3%) → net ≈ ¥7,667. The fund is NOT lost — it's your forced savings, withdrawable for housing.

Item	Rate	On ¥10,000
Pension 养老	8%	¥800
Medical 医疗	2% (+¥3)	¥203
Unemployment 失业	0.2–0.5%	¥20–50
Housing fund 公积金	5–12%	¥500–1,200
Income tax	progressive	varies

Employer pays ON TOP: ~25–30% more (pension 16%, medical ~9%, etc.) — your ¥10,000 salary costs the company ~¥13,500.

The tax step (monthly withholding)

Taxable = cumulative gross − cumulative deductions − cumulative ¥5,000/month − special additional deductions (children ¥2,000/mo each, parents ¥3,000/mo shared, mortgage interest ¥1,000/mo, rent ¥800–1,500/mo...). Progressive 3–45% on annual cumulative income, withheld monthly.

Worked examples

Example 1 — ¥8,000 gross, 7% fund, no special deductions. Social ≈ ¥843 + fund ¥560 = ¥1,403; taxable = 8,000 − 1,403 − 5,000 = ¥1,597 × 3% = ¥47.9 → net ¥6,549.

Example 2 — ¥20,000 gross, 12% fund, 1 child + mortgage. Social ¥2,100 + fund ¥2,400 = ¥4,500; taxable = 20,000 − 4,500 − 5,000 − 2,000 − 1,000 = ¥7,500/mo. January tax: 7,500 × 3% = ¥225 → net ¥15,275. (Later months step into 10% bracket as cumulative income grows — the "same salary, shrinking net" effect.)

Example 3 — Why December's net drops. Cumulative withholding: by October a ¥20k earner's cumulative taxable crosses ¥36,000 → bracket jumps 3% → 10%, so monthly withholding rises mid-year even though the annual bill is unchanged.

Common mistakes and myths

"The fund is a tax" — housing fund is YOUR account: withdrawable for purchase, rent (in many cities), renovation, or at retirement; employer matches it 1:1 — it's the best part of compensation.
Comparing gross offers — a ¥12k offer with 12% fund beats ¥13k with 5% fund for most homebuyers: fund is forced savings + tax-free + employer-matched.
Base ≠ actual salary — social/fund bases often use last year's average with local caps/floors; some employers declare a low base (illegal but common) — your take-home rises but pension/medical/fun benefits shrink.
Forgetting special deductions — failing to declare children/parents/rent in the tax app overpays tax all year (refundable in the annual settlement, but why wait).
Bonus blending blindness — annual bonus can be taxed separately (bonus ÷ 12 rate lookup) or merged into comprehensive income; the better option flips around ¥36–60k bonus levels — run both in March's settlement.

Frequently Asked Questions

What gets deducted from my gross salary?

Employee-side statutory deductions: pension 8%, medical 2% (+ a few yuan critical-illness), unemployment 0.2-1% by city, housing fund 5-12% (employer matches). These come out BEFORE income tax — they are the pre-tax deductions that shrink your taxable base. After them, the 5,000 standard deduction and special deductions apply, then the bracket table. Net = gross − insurance − fund − tax.

Why isn't my contribution base my actual salary?

Bases are bounded: floor = 60% and cap = 300% of the city's average wage, and some employers (illegally) contribute on a low base. ¥40k salary in a city with ¥12k average: base capped at 36k. ¥4k salary: base floored at 7.2k. The base typically resets each July on last year's average. Higher base = more deducted now but higher pension/medical balances later — the cap is why top earners' deduction % looks small.

What does ¥15,000 gross actually net?

Typical setup (12% fund, mid-city bases): pension 1,200 + medical 300 + unemployment ~75 = 1,575 insurance; fund 1,800; taxable = 15,000 − 1,575 − 1,800 − 5,000 = 6,625 → tax ~10% bracket ≈ 450-660/year-to-date method (first months lower). Net ≈ 15,000 − 1,575 − 1,800 − ~200 = ~¥11,400, drifting down through the year as cumulative withholding climbs. Plus the fund is YOUR money (1,800 + employer's 1,800 landing in your account).

Why does the same gross net differently across cities?

Three levers vary by city: (1) bases — floor/cap track the local average wage (Beijing/Shanghai highest); (2) rates — unemployment 0.2-1%, medical add-ons differ; (3) fund ratio — 5% vs 12% swings net pay by ~7% of gross (¥1,050 on ¥15k). A higher fund ratio lowers net today but is a forced saving with employer match — comparing offers on net pay alone undervalues 12%-fund packages.

What does my employer actually pay for me?

Employer-side contributions roughly: pension 16%, medical 8-10%, unemployment 0.5-1%, work injury 0.2-1%, maternity ~0.8%, housing fund matching 5-12% — totaling ~25-38% ON TOP of gross. ¥15k gross costs the company ~¥19-20k. This is the "labor cost" line in budgets and why headcount math uses 1.3× salary. The employer share does not come out of your gross — but it prices your hire.

What mistakes happen reading payslips?

(1) Judging offers by net pay only (fund ratio and base change the real package); (2) panic at year-end tax jumps (cumulative withholding — annual total is what matters); (3) assuming the fund deduction is lost money (it is your account, employer-matched 1:1 — the best guaranteed "return" in the package); (4) not noticing a low contribution base (illegal underpayment that shrinks your future pension and medical coverage — check against actual salary); (5) forgetting special deductions in the tax app (net pay rises when you file them); (6) comparing cities' salaries without the cost/tax/fund trifecta.

Key Takeaways

The deduction stack (employee share)

The tax step (monthly withholding)

Worked examples

Common mistakes and myths

Frequently Asked Questions