According to the Notice of State Taxation Administration of The People's Republic of China, Ministry of Finance of People's Republic of China (PRC) on Exemption of Individual Income Tax from One-time Compensation Income Obtained by Individuals and Employers, the one-time compensation income (including economic compensation, living allowance and other subsidies paid by employers) obtained by individuals due to termination of labor relations with employers shall be exempted from individual income tax; The excess part shall be calculated and collected according to the Notice of State Taxation Administration of The People's Republic of China City, People's Republic of China (PRC) on Individual Income Tax for Individual Obtaining Economic Compensation for Termination of Labor Contract. Article 47 of the Labor Contract Law: The economic compensation shall be paid according to the standard of one month's salary for each full year of work in the unit. For more than six months but less than one year, it shall be counted as one year; If it is less than six months, economic compensation of half a month's salary shall be paid to the workers. If the monthly salary of workers is three times higher than the average monthly salary of local workers announced by the people's government of the municipality directly under the central government or the city divided into districts where the employer is located, the standard for paying economic compensation to workers is three times the average monthly salary of workers, and the longest period for paying economic compensation to workers shall not exceed 12 years. Therefore, according to the provisions of the Labor Contract Law, the highest calculation standard for workers to obtain economic compensation can only be three times the average monthly salary of employees in the region last year. Therefore, according to the relevant provisions of the tax bureau, workers do not need to pay taxes to obtain economic compensation. This is actually a misunderstanding. As long as the average monthly salary of employees is less than 3 times of the average monthly salary of local employees in the previous year, it will not be restricted by 12 years if it is calculated as 2.9 times. In other words, workers can get more than 12 months of economic compensation, and the excess may be more than three times the average monthly salary of local workers in the previous year, and this part is still taxable.