Case Studies
Case Study: How a Family in Taiwan Gains from Recent Child-Related Income Tax Reforms
Recent reforms in Taiwan’s Income Tax Act increase exemptions for minor children and expand deductions for families—this case study shows how a typical dual income family can benefit nearly NT$20,000 annually.
By NomadicTax Research Team • 5-8 min read • September 16, 2026
## 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](https://www.mof.gov.tw/singlehtml/384fb3077bb349ea973e7fc6f13b6974?cntId=e88b59b51f844142a21d18f43117b3bb&utm_source=openai))
- These changes align with Taiwan’s population strategy aiming to reduce financial burden on child-rearing families. ([mof.gov.tw](https://www.mof.gov.tw/singlehtml/384fb3077bb349ea973e7fc6f13b6974?cntId=e88b59b51f844142a21d18f43117b3bb&utm_source=openai))
- 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](https://www.mof.gov.tw/singlehtml/384fb3077bb349ea973e7fc6f13b6974?cntId=e88b59b51f844142a21d18f43117b3bb&utm_source=openai))
## 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.