Core Viewpoint - The article discusses the taxation policies related to annual bonuses in China, specifically focusing on the timing of bonus payments and the options available for tax calculation, emphasizing the importance of understanding the tax implications for both employers and employees [6][9][15]. Group 1: Tax Calculation for Annual Bonuses - The "annual" in annual tax reconciliation refers to the tax year from January 1 to December 31, with income and deductions based on actual amounts received and incurred during this period [5]. - Bonuses paid in December 2025 are considered income for the 2025 tax year, while those paid in January 2026 are classified under the 2026 tax year, affecting the respective tax reconciliation periods [6][16]. - Employees can choose to either calculate tax on annual bonuses separately or include them in their comprehensive income for the year, with the option to compare both methods for the most favorable outcome [9][10]. Group 2: Types of Bonuses and Tax Treatment - Only annual one-time bonuses can be taxed separately; other types of bonuses, such as semi-annual or quarterly bonuses, must be combined with monthly salary for tax purposes [7][8]. - Each taxpayer can only use the separate tax calculation method once per tax year, meaning that split bonuses cannot be aggregated for this purpose [8][9]. - The policy for taxing annual one-time bonuses is effective until December 31, 2027, allowing residents to calculate tax based on a monthly average of the bonus amount [9][10]. Group 3: Tax Rates and Deductions - The tax rates for individual income tax are structured in brackets, with rates ranging from 3% for income not exceeding 3,000 yuan to 45% for income exceeding 80,000 yuan, along with corresponding quick deduction amounts [10]. - The calculation formula for tax on annual one-time bonuses is: Tax Payable = Annual Bonus Income × Applicable Tax Rate - Quick Deduction [9][10].