---
title: "China Employer Cost Breakdown 2026"
description: "China employer costs 2026: pension at 16%, IIT from 3% to 45%, 5 days paid leave. City-by-city social security guide."
canonical: https://www.teamed.global/country-hiring-guides/china/cost-breakdown
---

China · Cost breakdown child

Served by Teamed vetted partner-entity network in China

# How much does it really cost to *hire in China* in 2026?

China has no single national employer social security rate. The rate your hire attracts depends on the city. Pension alone is a uniform 16% nationally, but health, unemployment, work-injury, and maternity contributions are set locally. Total employer-side social security typically runs between 22% and 28% of salary before the housing provident fund is added.

Last reviewed 13 June 2026 · China guide

![A panoramic view of the Pudong financial district in Shanghai at dawn, towers reflected in the Huangpu River.](/images/country-guides/china-cost-breakdown.webp)

Illustration · Shanghai, China

Answer.cite this

China has no single employer social security rate. The rate depends on the city where your employee works. The pension component is a uniform 16% across all major cities. Every other component varies by local regulation.

In Shanghai, employer social security (excluding the housing provident fund) runs roughly 25.7 to 27.4% of salary. In Beijing the range is roughly 26.5 to 28.2%. In Guangzhou it is roughly 22.4 to 23.6%. Confirm the rate with the local social insurance bureau before making an offer.

Paid annual leave starts at 5 days for employees with 1 to 10 years of cumulative service. It rises to 10 days for 10 to 20 years and 15 days for 20 or more years. There are also 7 statutory public holidays.

Individual income tax (IIT) starts at 3% on taxable income up to CNY 36,000 a year after deductions. The top rate is 45%. The standard annual deduction is CNY 60,000.

![A wooden abacus beside a stack of payroll documents on a traditional desk in a Beijing office.](/images/country-guides/china-cost-breakdown-polaroid-1.webp)

Adding it up

## Social security: why the city determines the cost

There is no single employer social security rate in China. The total contribution depends on the city where the employee is registered. The pension component is uniform at 16% nationally. Health, unemployment, work-injury, and maternity contributions are set by each city's local government.

PwC data for 2026 shows the following indicative employer total rates excluding the housing provident fund: Shanghai roughly 25.7 to 27.4%, Beijing roughly 26.5 to 28.2%, Guangzhou roughly 22.4 to 23.6%. Verify the exact rate with the relevant local social insurance bureau before finalising any cost model.

| Component | Employer rate note | Scope |
| --- | --- | --- |
| Basic pension insurance | 16% (national standard) | All major cities; uniform since May 2019 |
| Basic medical insurance | Varies by city | Set by local government; confirm locally |
| Unemployment insurance | Varies by city | Set by local government; confirm locally |
| Work-injury insurance | Varies by industry and city | Industry-risk-rated; confirm locally |
| Maternity insurance | Varies by city | Some cities have folded this into medical |
| Housing provident fund | Varies by city (typically 5 to 12% of salary) | Separate from social insurance; managed by MHURD |
| **Total (excl. housing provident fund)** | **Roughly 22 to 28% depending on city** | **Illustrative range; verify locally** |

The pension sub-component is the only figure that can be stated as a single verified national number. All other components require city-level verification. Do not rely on a national average for budgeting a specific hire.

### The housing provident fund

The housing provident fund (HPF) is a mandatory employer-and-employee savings scheme for housing. It is separate from the five social insurance contributions. Both the employer and employee contribute at rates set by local government, typically between 5% and 12% of the employee's fund contribution base. The HPF is not included in social insurance rate tables. It adds meaningfully to the total cost of employment and must be modelled separately for each city.

PwC · China Individual Other Taxes, 2026

PwC Worldwide Tax Summaries confirms the employer pension rate at 16% in Shanghai, Beijing, and Guangzhou. Total employer rates excluding the housing provident fund are city-specific: Shanghai 25.7 to 27.4%, Beijing 26.5 to 28.2%, Guangzhou 22.4 to 23.6%. PwC states verbatim that rates "are governed by local rules, which may vary among the local jurisdictions."

Source: [PwC Worldwide Tax Summaries, China Other Taxes (2026)](https://taxsummaries.pwc.com/peoples-republic-of-china/individual/other-taxes)

### Employee social security

Employees contribute to the same five social insurance programmes. The employee pension rate is 8%. The total employee contribution rate in major cities is typically around 10.5% (pension 8% plus medical 2% plus unemployment 0.5%) before the housing provident fund. This is not a cost to the employer but it reduces the employee's take-home pay and affects total compensation planning.

1. Confirm the city of employment Social security rates and housing provident fund rules are set locally. Before modelling any cost, confirm which city the employee will be registered in.
2. Get the city social security schedule Contact the local social insurance bureau or your payroll partner to obtain the current employer contribution rates for pension, medical, unemployment, work-injury, and maternity in that city.
3. Add the housing provident fund Budget the housing provident fund separately from social insurance. Rates are set by the local housing bureau and typically range from 5% to 12% of the contribution base for both employer and employee.
4. Apply IIT withholding monthly Use the cumulative withholding method. Remit the IIT due by the 15 daysth of the following month. The amount changes across the year as the employee moves through brackets.
5. Check the applicable provincial leave rules The national annual leave minimum applies universally. Maternity leave extensions are set at provincial level and can be much longer than the national floor. Verify both before finalising the employment package.

## What does a CNY 300,000 hire actually cost?

The following table uses a CNY 300,000 annual gross salary and the verified 16% pension rate. All totals are illustrative. They are computed from verified cached rates where noted. The social security total uses a mid-range estimate of 25% employer total (excluding housing provident fund) for a Shanghai-based hire.

Figures marked illustrative are not statutory numbers. The actual cost depends on the city, the applicable local rates, and whether a housing provident fund is required.

| Line | CNY 300,000 hire (illustrative) | Basis |
| --- | --- | --- |
| Gross annual salary | CNY 300,000 | Contract |
| Employer pension at 16% | CNY 48,000 (illustrative) | 16% x CNY 300,000, verified national rate |
| Employer medical, unemployment, work-injury, maternity (city-variable; illustrative at approximately 9% for Shanghai) | CNY 27,000 (illustrative) | City-specific; verify locally |
| Housing provident fund (illustrative at 7%) | CNY 21,000 (illustrative) | City-specific; verify locally |
| Annual leave (5 days for 1 to 10 years service; cost built into salary) | Included in gross | [State Council Decree No. 514, 2008](https://www.lehmanlaw.com/resource-centre/newsletter/china-law-digest/regulations-on-paid-annual-leave-for-employees.html) |
| Teamed fee | from $599/month (USD) | Zero FX mark-up |
| **Estimated total employer cost (excl. Teamed fee, illustrative)** | **CNY 396,000 (illustrative)** | **Approximately 132% of gross; illustrative, Shanghai rates** |

The table above is illustrative. The pension figure uses the verified 16% national rate. The medical, unemployment, work-injury, and maternity total uses a mid-range Shanghai estimate and is not a statutory figure. The housing provident fund rate is indicative at 7% and will vary by city and agreement. Total cost as a percentage of gross salary in China typically falls between 125% and 145% depending on the city and housing fund rate.

Use the [Teamed Employer Cost Calculator](https://www.teamed.global/tools/employer-cost) to model your specific hire and city.

## Paid leave: modest by global standards but mandatory

China's statutory paid annual leave is 5 days for employees with 1 to 10 years of cumulative service. It rises to 10 days for 10 to 20 years and 15 days for 20 or more years.

There are also 7 statutory public holiday occasions. These are fixed national holidays and are separate from the annual leave entitlement.

| Entitlement | Amount |
| --- | --- |
| Paid annual leave (1 to under 10 years service) | 5 days |
| Paid annual leave (10 to under 20 years service) | 10 days |
| Paid annual leave (20 or more years service) | 15 days |
| Statutory public holiday occasions | 7 |
| National maternity leave (minimum) | 98 days |
| Paternity leave | Varies by province; typically 7 to 30 days under local regulations |

### Annual leave and cumulative service

China's leave entitlement is based on the employee's total cumulative service across all employers, not just tenure with the current employer. An employee who joins you with 12 years of prior service is already in the 10 days band. Ask for a work history summary at onboarding. Paying out untaken leave on termination at the wrong rate creates labour dispute risk.

### Public holidays

The 7 statutory holiday occasions are New Year, Spring Festival (three days), Tomb Sweeping Day, Labour Day, Dragon Boat Festival, Mid-Autumn Festival, and National Day (three days). Some are paired with adjacent weekend-swap days, which means employees may work on what would normally be a day off to keep the holiday block continuous. Payroll must reflect these swaps correctly or overtime penalties apply.

### Maternity and paternity leave

National minimum maternity leave is 98 days under State Council Decree No. 619 (2012). Many provinces extend this to 128, 158, or even 180 days to encourage childbirth under population policy. The provincial extension applies; always verify the rate for the province of employment before onboarding. Paternity leave is set at the provincial level and ranges from 7 to 30 days across provinces. There is no single national figure. Verify for the employee's home province.

### Sick leave

China's sick-leave rules are set under a 1994 Ministry of Labour notice. The minimum sick pay rate for employees with less than two years of service is at least 60% of wages in major cities, though the verified cache figure for this has citation debt and should be confirmed with a local adviser. The medical treatment period (the protected window during which you cannot dismiss a sick employee) ranges from three months to twenty-four months depending on service length and city.

## Individual income tax: seven brackets, one withholding deadline

China uses a seven-band progressive IIT schedule. The standard annual deduction is CNY 60,000. The first band of taxable income after that deduction is taxed at 3%. The top rate of 45% applies above CNY 960,001 of annual taxable income.

Employers must withhold IIT monthly and remit it by the 15 daysth of the following month.

| Annual taxable income after deductions (CNY) | IIT rate |
| --- | --- |
| CNY 0 to CNY 36,000 | 3% |
| CNY 36,001 to CNY 144,000 | 10% |
| CNY 144,001 to CNY 300,000 | 20% |
| CNY 300,001 to CNY 420,000 | 25% |
| CNY 420,001 to CNY 660,000 | 30% |
| CNY 660,001 to CNY 960,000 | 35% |
| Above CNY 960,001 | 45% |

### How IIT withholding works

China uses a cumulative withholding method introduced with the 2018 IIT reform. Each month, the employer recalculates the year-to-date IIT liability and deducts any amount already withheld. This means the monthly withholding amount changes across the year as the employee moves through brackets. The employer remits the difference to the tax authority by the 15 daysth of the following month. Employees file an annual reconciliation (consolidated IIT return) in March to April if they have multiple income sources or their total annual income exceeds CNY 120,000.

### Additional deductions

The standard deduction of CNY 60,000 per year applies to all resident employees. Additional special deductions cover children's education, continuing education, healthcare for serious illness, housing loan interest, housing rent, and eldercare. These are claimed by the employee, not the employer, and reduce the IIT liability further. High-earning employees with children or mortgage interest will likely pay less IIT than the standard bracket table suggests.

### Expatriate considerations

Foreign nationals working in China were previously entitled to a separate "foreigner tax allowance" covering housing, meal, and transport subsidies. The transitional period for that scheme ended in 2023. Foreign employees now use the same seven-bracket IIT schedule as Chinese nationals. Some treaty benefits remain available depending on the employee's home country. Confirm with a local tax adviser for any senior foreign hire.

Source: [PwC Worldwide Tax Summaries, China Individual Income Tax (2026)](https://taxsummaries.pwc.com/peoples-republic-of-china/individual/taxes-on-personal-income)

## The costs most buyers miss in China

Three things sit outside the headline social security discussion. They are real costs that appear after the contract is signed: the housing provident fund, provincial leave extensions, and the severance liability that accrues from day one.

None of these are optional. All of them can be sized accurately at offer stage if you know they are coming.

### The housing provident fund

The housing provident fund is not a social insurance contribution. It is a separate mandatory savings scheme administered by the local Ministry of Housing and Urban-Rural Development bureau. Both employer and employee contribute, typically at matching rates set by the city (commonly between 5% and 12% of the contribution base). In Shanghai and Beijing, combined contributions can reach 20% or more of the contribution base. Budget for it separately from the five social insurance contributions. It does not appear in standard employer social security rate tables.

### Provincial maternity leave extensions

The national minimum maternity leave is 98 days. Most provinces now extend this materially under local family planning regulations, often to 128, 158, or 180 days. During the extended period, whether the employer or the state pays depends on the province. Some provinces pay the extension from the maternity insurance fund; others require the employer to cover it. Do not assume the national minimum applies to your specific province.

### Statutory severance from day one

China requires employers to pay severance on non-fault termination at one month of salary per year of service under Article 47 of the Labour Contract Law. There is no minimum qualifying period. A hire made today starts accruing severance liability immediately. For a hire you expect to retain for five years, that is five months of salary in severance on non-fault exit. Budget this as a deferred liability from the date of hire, not from the end of probation.

### Minimum wage varies by city

There is no single national minimum wage. The highest provincial monthly minimum wage is CNY 2,740/month in Shanghai, effective 1 January 2026. Other cities and provinces set lower floors. Any job offer must meet or exceed the minimum wage applicable to the city of employment.

## How does Teamed handle China payroll for you?

Teamed becomes your legal [employer of record](/lp/employer-of-record) in China for [**from $599 per employee per month**](/pricing), with **zero FX mark-up** in any currency.

City-specific social security, the housing provident fund, IIT withholding, and the full China employment compliance stack run on **one platform**.

**Real HR and legal experts** handle your China hires from the first offer letter through every monthly IIT remittance and annual social insurance reconciliation. **An actual person**, not a chatbot or a pooled queue, manages your account. There is **no setup fee** and **no exit fee**. Every employer contribution **passes through at cost, itemised** on every invoice. You see the pension line, the housing fund line, the city medical line. Nothing is hidden inside the management fee.

China requires city-by-city registration with the local social insurance bureau and housing fund authority. The contribution rates, contribution bases, and filing deadlines vary by city. Teamed's local entity network covers major hiring cities so you don't need to set up a Wholly Foreign-Owned Enterprise (WFOE) to make your first hire. You can **graduate** from EOR to your own China entity when the team size justifies the overhead, and EOR is the right structure **until it isn't**. Start from the China hiring overview or run the [Employer Cost Calculator](https://www.teamed.global/tools/employer-cost) to model the full picture.

## Frequently asked questions

What is the employer social security rate in China in 2026?

There is no single national employer social security rate in China. Rates are set by local government for each city. The pension component is a uniform 16% across all major cities. Total employer social security excluding the housing provident fund is roughly 25.7 to 27.4% in Shanghai, 26.5 to 28.2% in Beijing, and 22.4 to 23.6% in Guangzhou. Confirm the applicable rate with the local social insurance bureau before making an offer.

What is the employer pension rate in China in 2026?

The mandatory basic pension insurance contribution rate for employers is 16%. This is a uniform national rate that has applied since May 2019. Employees contribute 8%. The pension contribution is the only social insurance component that can be stated as a single national rate; all other contributions are city-specific.

How much paid annual leave must a Chinese employer provide?

Statutory paid annual leave in China is 5 days for employees with 1 to 10 years of cumulative service. It rises to 10 days for 10 to 20 years and 15 days for 20 or more years. There are also 7 statutory public holiday occasions. Leave entitlement is based on total cumulative work history across all employers, not just tenure with the current employer.

What are the income tax rates for employees in China in 2026?

China uses a seven-band progressive IIT schedule. The standard annual deduction is CNY 60,000. The lowest rate is 3% on the first CNY 36,000 of annual taxable income after the deduction. The top rate of 45% applies above CNY 960,001 of annual taxable income. Employers withhold IIT monthly using the cumulative method and remit by the 15 daysth of the following month.

What is the housing provident fund and does every employer have to pay it?

The housing provident fund is a mandatory employer-and-employee savings scheme for housing, separate from the five social insurance contributions. Both parties contribute at matching rates set by the local city authority, typically between 5% and 12% of the fund contribution base. It is required for employees registered in cities that operate the scheme, which covers all major Chinese cities. Budget it separately from social insurance when modelling total employer cost.

Teamed Legal Operations

The question we hear most often on China hires is: what is the employer social security rate? There is no single answer. The pension component is uniform at 16%. Everything else is city-specific. We have seen clients build cost models using a national average, then discover their Shanghai hire costs eight percentage points more than they budgeted once the housing provident fund is included. Get the city schedule before you send the offer letter.

A note from Tom Price-Daniel

China's employer pension rate is a uniform 16%. Everything else changes by city.  
Add the housing provident fund and the total employer cost sits between 125% and 145% of gross depending on where the hire is based.  
Know the city before you model the cost.

Tom Price-Daniel · Co-founder, Teamed

## Related China guides

- Hiring in China, overviewparent
- [China tax and payroll](/country-hiring-guides/china/tax-and-payroll)sibling
- [China termination and severance](/country-hiring-guides/china/termination-and-severance)sibling
- [Employer of Record overview](/lp/employer-of-record)core
- [Pricing, Zero FX Fixed](/pricing)core
- [Employer Cost Calculator](https://www.teamed.global/tools/employer-cost)tool
- [Crossover Calculator](https://www.teamed.global/tools/crossover-calculator)tool
- [Talk to an expert](https://www.teamed.global/contact)CTA

A note on this page.

This is a guide, not legal, tax, or accounting advice. Rules change and vary by jurisdiction. China has no single national employer social security rate. Rates are set by local government for each city. The pension component of 16% is a verified national standard but all other social insurance contribution rates must be confirmed with the relevant local social insurance bureau before relying on any figure. The housing provident fund is administered separately by local housing authorities and is not included in social insurance rate schedules. Verify current requirements with the Ministry of Human Resources and Social Security and your local social insurance bureau before making any employment offer.