Taipei: Taiwan's Legislature on Friday passed an amendment to the Income Tax Act that increases the tax exemption for families with minor children by 50 percent starting this year, in a bid to reduce the financial burden of raising children.
According to Focus Taiwan, the Ministry of Finance (MOF) stated that the change is expected to benefit 2.37 million people and reduce their tax burden by about NT$8 billion (US$251.29 million). The amendment raises the tax exemption for each minor child from NT$101,000 to NT$151,500, effective January 1, 2026. This new exemption will apply to income tax returns filed in May 2027.
The MOF further explained that taxpayers with dependents under 6 years old can claim the increased tax exemption alongside the existing preschool special deduction. This deduction stands at NT$150,000 for the first child and NT$225,000 for the second and each subsequent child. Consequently, when combined with the NT$151,500 tax exemption, the total deductible amount will be NT$301,500 for the first child and NT$376,500 for the second and each subsequent child under 6.
In addition, the amendment eliminates the NT$24,000 annual cap on itemized deductions for premiums paid towards Labor Insurance, Farmers' Health Insurance, National Pension Insurance, and military, civil servant, and teacher insurance, aligning them with premiums paid for national health insurance.
The MOF has indicated that the revised tax exemption and itemized deduction for insurance premiums will apply to income tax returns for 2026, filed in 2027. Furthermore, the ministry plans to update the relevant tax return forms and instruct local tax offices to prepare for the changes. They will also enhance public outreach to ensure taxpayers understand the new rules.