The income inequality has become a focal issue in China. The paper analyzes new changes in China's income distribution. The income gap between urban and rural residents has been reduced in 2012, which results the overall reduction of the income inequality. As to the functional distribution, the aggregate labor share increases in 2012 due to the decreasing share of secondary industry. The income distribution among households, firms and government is still favorable to the government, and government gets more fiscal advantage through the income redistribution. <<