Tax-deductible allowance for living costs may be raised by NT$7,000

Taipei, Aug. 14 (CNA) The annual tax-deductible allowance for basic living expenses could be raised to NT$220,000 (US$6,870) per person for tax filers in 2027, according to the Directorate-General of Budget, Accounting and Statistics (DGBAS) on Friday.

In its presentation of the 2025 household income and expenditure survey, the DGBAS said median disposable income per capita was NT$366,841, up 3.16 percent from the previous reporting year.

Using this figure, the tax-deductible allowance for basic living expenses per person should end up at around NT$220,000 for income earned in 2026, a NT$7,000 increase from NT$213,000 in 2025, the statistics agency said.

According to the Taxpayers' Rights Protection Act passed in 2017, the government shall not tax the amount individuals need to cover basic living expenses, which is set at 60 percent of median per capita disposable income from the preceding year.

The Ministry of Finance (MOF) said the exact figure for the adjusted tax-deductible allowance for basic living expenses will be officially announced at the end of this year.

Under Taiwan's tax system, if the basic living expenses allowance exceeds the sum of the personal exemption, standard deduction, and special deductions given to all taxpayers in Taiwan, the difference can be deducted from the taxpayer's gross income.

This allowance is generally used by households with children filing taxes, because for single taxpayers and couples without dependents, the combined total of the basic exemption and standard and special deductions is usually more favorable.

PwC Taiwan family business and wealth succession services accountant Lee Nan-han (李南漢) said that assuming the basic living expense deduction is raised by NT$7,000, the total deduction for a four-member family consisting of a married couple and two minor children would increase by NT$28,000.

Lee explained that if the family is subject to a 5 percent income tax rate, it would be expected to save NT$1,400 in taxes. If the applicable tax rate is 12 percent, the family would save NT$3,360, while at a 20 percent tax rate, it would pay NT$5,600 less in taxes.