(LI SHIGONG)

The reformed Individual Income Tax Law came into force on January 1.

It raised the minimum threshold for personal income tax exemption from 3,500 yuan ($513) to 5,000 yuan ($733) per month. Special deductions were added for expenses like caring for elderly parents, children's education and continuing education. Treatment for serious diseases also came under exemption as well as housing loan interests and rents.

With the new policy in place, urban residents with a monthly income of 10,000 yuan ($1,466) can enjoy more than 60 percent tax cuts.

The individual income tax is the third major contributor to overall national tax revenue, following value-added tax and enterprise income tax.