Three key financial aspects after discharge: one-time separation pay, military service counting toward work seniority, and tax deductions for self-employed veterans

6. Three key financial aspects after discharge: one-time separation pay, military service counting toward work seniority, and tax deductions for self-employed veterans

Cost: There are no direct costs involved. Upon discharge, the military transfers your social insurance records and payments to you, and you then register these with the local social insurance office.

In plain terms: After leaving the military, three main financial factors matter. First, there is a one-time separation payment for veterans who choose to work independently; the amount depends on how many years you served, with additional bonuses for those who earned commendations. Second, your military service years count toward your overall work seniority, allowing them to be combined with any pre- or post-discharge work history for social insurance purposes. Third, if you start your own business, you may qualify for tax deductions of up to 20,000 yuan per year for three years.

Benefit: The first benefit is outlined in the Regulations on the Resettlement of Veterans: “Veterans who choose to work independently receive a one-time separation payment based on their years of service.” This payment is funded by the central government, with specific amounts determined by relevant authorities and adjusted periodically. Additional bonuses are provided in five tiers: 25% for recipients of medals or honorary titles, 20% for those with first-class combat achievements or first-level commendations, 15% for second-class combat achievements or first-level commendations, 10% for third-class combat achievements or second-level commendations, and 5% for fourth-class combat achievements or third-level commendations. The regulations also state that veterans who do not find employment immediately may claim unemployment benefits, with their military service years counted toward insurance contributions, except for those placed in retirement or supported through other programs. The second benefit comes from the Veterans Protection Law: “Military service years are counted toward overall work seniority, which is then combined with any subsequent work history.” This seniority is also factored into pension, medical, and unemployment insurance calculations, and veterans’ service is recognized as equivalent to grassroots work experience under the Military Insurance Law. Finally, a 2023 joint announcement by the Ministry of Finance, State Taxation Administration, and Veterans Affairs Ministry allows self-employed veterans to deduct up to 20,000 yuan per year from their taxes for three years, with a possible 20% increase; this amount is subtracted from the total tax owed rather than provided as a cash payment. Employers hiring veterans may also receive a deduction of up to 6,000 yuan per employee per year, with a 50% increase possible. These provisions are effective from January 1, 2023, through December 31, 2027. It is important to note that this tax benefit is separate from any local “one-time economic subsidies” provided by individual regions, which are determined independently and may vary widely.

Evidence grade: A

Sources: State Council of China, Central Military Commission (2024). Regulations on the Placement of Veterans (State Council of China, Central Military Commission Order No. 787, Articles 21, 22, 74, 81, 85). <https://www.gov.cn/gongbao/2024/issue_11526/202408/content_6969192.html>; Ministry of Veterans Affairs (2020). Ten questions about one-time retirement benefits (reprinted from "China Veterans" Issue 10, 2020): "Basic standards. Soldiers will be awarded 4,500 yuan for each year of active service." "Retirement payment standards will be adjusted in due course". <https://www.mva.gov.cn/sy/zzxc/202011/t20201113_43153.html>; Guizhou Provincial Department of Veterans Affairs (2024). One-time additional pension payment, important changes! : "The current standard is: Soldiers will receive 4,500 yuan for each year of active service." <http://tyjrswt.guizhou.gov.cn/zfxxgk/fdzdgknr/zdlyxx_5621158/tyaz_5621161/202408/t20240809_85367194.html>; Muping District People's Government of Yantai City (2025). The reply quoted "Notice of Yantai Municipal Veterans Affairs Bureau and Yantai Municipal Finance Bureau on Adjusting the One-time Economic Subsidy Standard for Self-Employed Retired Soldiers": "A subsidy of 6,000 yuan for each year of service for retired soldiers who retire from active service in 2024". <https://www.muping.gov.cn/art/2025/11/10/art_105032_2960250.html>; National People's Congress Standing Committee (2020). Veterans' Insurance Law (Articles 42, 44, 50). <http://www.mod.gov.cn/gfbw/fgwx/flfg/16048597.html> (published by the Ministry of National Defense); National People's Congress Standing Committee (2012). Military Personnel Insurance Law (Articles 16, 23). <https://flk.npc.gov.cn/detail?id=2c909fdd678bf17901678bf73e160645> (National Laws and Regulations Database); Ministry of Finance, State Administration of Taxation, and Ministry of Veterans Affairs (2023). Announcement on tax policies to further support the entrepreneurship and employment of self-employed retired soldiers (No. 14, 2023). <https://www.gov.cn/zhengce/zhengceku/202308/content_6896456.htm>

Notes: The regulations specify that exact payment amounts will be set by relevant authorities, though an official figure of 4,500 yuan per service year was cited in a 2020 Ministry of Veterans Affairs statement that also noted future adjustments. This figure no longer aligns with current regulations, which must be followed instead. As of August 2024, Guizhou Province’s Veterans Affairs Department continues to reference the 4,500 yuan figure, though no official nationwide standard has been published. Additionally, families of conscripts receive a separate preferential allowance during service, the amount of which is determined locally with some central funding support. The tax deduction described applies only to eligible self-employed veterans and may not be fully utilized if their actual tax liability is lower. A newer regulation effective August 1, 2026, further expands benefits by recognizing professional certifications earned during service as valid nationwide. 〔36〕