Taiwan raises long-term care tax deduction to NT$180,000

Taipei, Dec. 9 (CNA) The Legislative Yuan has approved an amendment that will raise the annual long-term care deduction from NT$120,000 (US$3,853) to NT$180,000 to ease the financial burden of households supporting a dependent who requires long-term care.

The change, passed Tuesday, will apply retroactively from Jan. 1, 2025 and start to take effect in tax filings in May 2026.

Under Article 17 of the Income Tax Act, taxpayers may claim the deduction to taxable income for themselves, their spouses, or dependents officially recognized by the Ministry of Health and Welfare as requiring long-term care due to physical or cognitive impairment.

Lawmakers across party lines had submitted proposals to increase the deduction to between NT$180,000 and NT$360,000, citing Taiwan's rapidly aging population and rising caregiving costs.

They later reached a consensus to set the deduction at NT$180,000.

During a Finance Committee review of the measure in August, Finance Minister Chuang Tsui-yun (莊翠雲) said the NT$120,000 deduction was introduced in 2018 and had not been changed since.

She said most legislators backed raising it to NT$180,000 as a step to address the financial realities of caregiving needs.

Sung Hsiu-ling (宋秀玲), the director-general of the Finance Ministry's Taxation Administration, said the increase would reduce annual tax revenue by about NT$1 billion under current eligibility rules.

The actual figure, however, is expected to be higher once looser eligibility criteria seen in the amendment take effect, Sung said.

The Finance Ministry estimates the new measure will benefit about 350,000 taxpayers.