Taiwan passes amendment raising tax exemption amounts for children

Taipei, Aug. 22 (CNA) 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.

In a statement, the Ministry of Finance (MOF) said the change is expected to benefit 2.37 million people and reduce their tax burden by about NT$8 billion (US$251.29 million).

Under the amendment, the tax exemption for each minor child will increase from NT$101,000 to NT$151,500, effective Jan. 1, 2026. The new exemption will apply to income tax returns filed in May 2027.

The MOF said taxpayers with dependents under 6 years old can claim the tax exemption together with the existing preschool special deduction, which is NT$150,000 for the first child and NT$225,000 for the second and each subsequent child.

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 6 or under.

Meanwhile, the amendment also removed the NT$24,000 annual cap on itemized deductions for premiums paid for Labor Insurance, Farmers' Health Insurance, National Pension Insurance, and military, civil servant and teacher insurance, bringing them in line with premiums paid for national health insurance.

The MOF said the revised tax exemption and itemized deduction for insurance premiums will apply to income tax returns for 2026 filed in 2027.

It will revise the relevant tax return forms accordingly and instruct local tax offices to prepare for the changes and step up public outreach to ensure taxpayers understand the new rules.