Compliance
Compliance Case Study: Taiwanese Family Support Tax Reform 2026
Taiwan’s September 2026 reforms significantly increased child and insurance deduction amounts—with strict documentation and timing rules. This case study illustrates compliance required by parents to maximize benefits.
By NomadicTax Research Team • 5-8 min read • September 11, 2026
## Background of the Reform
In **August 2026**, Taiwan's Legislative Yuan passed amendments to the **Income Tax Act** (Article 17 & 126), introducing a new tax relief package for **parenting families** starting from income earned on **1 January 2026** (tax filing in May 2027). Key changes include: an increase in the **exemption for minors** (未成年子女免稅額) by **50%**, rising from NT$101,000 to **NT$151,500** per minor; and changes to how insurance premiums and social insurance are deductible, particularly abolishing the prior cap for certain categories. ([mof.gov.tw](https://www.mof.gov.tw/%20/singlehtml/384fb3077bb349ea973e7fc6f13b6974?cntId=8b12f394a64e40959fd1f8e805ecf853&utm_source=openai))
## Key Compliance Requirements
- **Effective dates**: The amendments apply to **income earned since January 1, 2026**, i.e. filing in May 2027 for the 2025 (115th) tax year. ([mof.gov.tw](https://www.mof.gov.tw/%20/singlehtml/384fb3077bb349ea973e7fc6f13b6974?cntId=8b12f394a64e40959fd1f8e805ecf853&utm_source=openai))
- **Exemption amounts**:
- Under-18 child exemption increased to NT$151,500 per child. ([mof.gov.tw](https://www.mof.gov.tw/%20/singlehtml/384fb3077bb349ea973e7fc6f13b6974?cntId=8b12f394a64e40959fd1f8e805ecf853&utm_source=openai))
- For children aged 6 or under, child under-six preschool special deduction (幼兒學前特別扣除額) remains available **in addition** to the exemption. The first child gets NT$150,000, second and subsequent NT$225,000 in preschool deductions; together with exemption sums this could sum to about **NT$301,500** for the first child. ([mof.gov.tw](https://www.mof.gov.tw/%20/singlehtml/384fb3077bb349ea973e7fc6f13b6974?cntId=8b12f394a64e40959fd1f8e805ecf853&utm_source=openai))
- **Insurance deduction cap removed**: Previously, insurance premiums were subject to a listing deductible cap of NT$24,000. Now that cap does not apply to certain social insurance (labor insurance, health insurance for farmers, national pension, and insurance for military, teaching, etc.). ([mof.gov.tw](https://www.mof.gov.tw/%20/singlehtml/384fb3077bb349ea973e7fc6f13b6974?cntId=8b12f394a64e40959fd1f8e805ecf853&utm_source=openai))
## Steps for Families to Maximize Benefit (Compliance Actions)
1. **Determine children's ages and exact status** as at filing date to confirm age-based exemption/deduction eligibility.
2. **Compile and submit evidence** for preschool education costs (invoices, receipts) for 6 or under children if claiming the special deduction. Keep insurance/social insurance policy documents for all qualifying premiums.
3. **Claim correctly on tax forms** for \(115-year) annual consolidated income tax filings in May 2027, mapping the new exemption, deduction items.
4. **Check whether insurance premiums were already deducted under old rules**—if amounts exceeded the old cap, verify whether you now benefit from increased/no cap on social insurance premiums.
5. **Stay aware of interaction with other deductions or credits**, especially if you have multiple children or elderly dependents; ensure not to double-claim or exceed allowed amounts.
## Example – Family of Four
Parents with two children aged 4 and 8, both preschool kindergarten, and both working and paying into mandatory insurance/social insurance. In prior years, they claimed: child exemption NT$101,000 each; insurance deduction capped at NT$24,000; preschool deduction for one child. Under new rules,
- Minor exemption per child now NT$151,500 → adding NT$100,000 extra per child exempted amount.
- Preschool deduction for younger child: NT$150,000 + exemption NT$151,500 = **NT$301,500** reduction.
- Insurance premiums for parents and children in social insurance can be fully claimed without the old NT$24,000 cap.
Net taxable income drops significantly—likely placing filer in lower tax bracket or reducing liability substantially.
## Common Pitfalls to Avoid
- **Missing deadline:** Taiwan’s annual filing for 115-year income tax is in **May 2027**; claims apply to income from Jan-Dec 2026. Late filings may lose benefit.
- **Insufficient documentation:** Preschool fees and insurance must be well documented. If receipts lack official endorsements or details, tax office may reject claims.
- **Misapplication of caps:** Only certain insurance/social insurance types are newly exempt from the old NT$24,000 cap; others aren’t. Check individual eligibility carefully.
---
This Taiwanese tax reform is a boon for families—but only if taxpayers plan ahead, collect proof, and file accurately. Consultation with a Taiwanese tax professional is highly recommended to avoid errors and maximize benefits.