China's top legislature adopted a law amendment to raise the country's individual income tax threshold from 1,600 yuan a month to 2,000 yuan.

The individual income tax threshold increase was believed to relieve the economic burden of medium- and low-income earners amid the recent price increase of some goods.

The amendment will go into effect as of March 1, 2008.

Raising the threshold of individual income tax collection from 1,600 yuan to 2,000 yuan means a reduction of 30 billion yuan in State revenue a year, according to official statistics.

However, the rise in personal income tax collection threshold will free 70 percent of income earners from paying income tax. The current threshold of 1,600 yuan makes 50 percent of income earners free from paying the tax.