Policy Background
- Taiwan’s Executive Yuan approved amendments to Articles 17 and 126 of the Income Tax Act increasing the exemption for minor children by 50 %. (mof.gov.tw)
- These changes align with Taiwan’s population strategy aiming to reduce financial burden on child-rearing families. (mof.gov.tw)
- They apply from January 1, 2026, meaning families file for the first time under the rule in mid-2027 for the 2026 tax year. (mof.gov.tw)
Hypothetical Family Profile
| Member | Income | Current Exemption per Child | Exemption under Reform |
|---|---|---|---|
| Parent A | NT$1,200,000/year | NT$80,000 per minor child | NT$120,000 per minor child |
| Parent B | NT$1,200,000/year | same | same |
| Children | two minors (<18) | total exemption NT$160,000 | NT$240,000 |
Tax Outcome Before & After Reform (2026 Tax Year)
- Before reform: With two minor children, their exemptions total NT$160,000. Assuming consolidated income after deductions and other allowances, parent tax rate bracket at 20 %.
- After reform: New exemption total rises to NT$240,000 — freed up NT$80,000 of taxable income. At 20 % tax rate, this yields tax savings of NT$16,000 per year just from child exemption increase. – Additional savings may accrue if special deductions (long-term care, etc.) are applicable.
Broader Impacts & Practical Considerations
- Nominal benefit per child increases: For many households, especially dual-income with moderate income, the exemption bump will generate visible savings.
- Tax planning for mid-year income shifts: As applies from January 1, 2026, family with children born during 2026 must ensure birth registrations and dependent status documented for claims in 2027 filing.
- Interplay with other deductions: Families may also use special or standard deductions; ensure combined deductions and exemptions applied to maximize net income reduction.
Tips for Families to Capture Benefits Fully
- Keep birth-certificate and age proof for children; register dependents promptly.
- Review withholding on salaries—employers may adjust dependent declarations once the exemption amount increases.
- Consider pushing eligible expenses into 2026 when possible to coincide with increased exemptions.
- When filing in mid-2027, ensure reporting the increased exemption amount and claim correct child counts.
Conclusion
This change in Taiwan offers meaningful tax relief for families with minor children. Through effective documentation and timing, many households can save tens of thousands of NT$ annually, helping with budgeting in inflationary times and alleviating cost pressures of raising children.