IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v77y2025ics1544612325004052.html
   My bibliography  Save this article

Tax incentives and household consumption: Evidence from the personal income tax reform

Author

Listed:
  • Zhan, Xinyu
  • Liang, Lanxin
  • Yu, Mingzhe

Abstract

This study focuses on the impact of tax incentives on household consumption in the context of personal income tax reform. Our results show that the 2018 personal income tax reform increases household consumption, and the primary mechanism through which the reform promotes consumption operates through increased disposable income, with its magnitude being influenced by liquidity constraint theory and precautionary savings theory. The implementation of special additional deductions in 2018 personal income tax increases household consumption, however, not all deduction items can promote consumption. In different income levels and income types, there is a different effect in this reform.

Suggested Citation

  • Zhan, Xinyu & Liang, Lanxin & Yu, Mingzhe, 2025. "Tax incentives and household consumption: Evidence from the personal income tax reform," Finance Research Letters, Elsevier, vol. 77(C).
    • Handle: RePEc:eee:finlet:v:77:y:2025:i:c:s1544612325004052
    DOI: 10.1016/j.frl.2025.107142
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612325004052
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2025.107142?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:77:y:2025:i:c:s1544612325004052. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.