Background
In late June 2026, Taiwan’s Executive Yuan approved amendments to Articles 17 and 126 of the Income Tax Act that increase the tax exemption for minor dependent children by 50%, effective from January 1, 2026, meaning it can be claimed when filing 2026 combined income tax returns in May 2027. (mof.gov.tw) This measure is targeted at alleviating fiscal burdens on families amid declining birth rates, with over 2.3 million taxpayers estimated to benefit and tax relief around NT$8 billion. (mof.gov.tw)
What Changed & When It Applies
| Element | Previous Rule | New Rule |
|---|---|---|
| Dependent Minor Child Exemption | Base exemption amount | Exemption increased by 50% |
| Effective Date | — | From January 1, 2026, applied in 2027 filings |
| Filing Period | Calculated in 2027 | Reflects income earned in 2026 |
Who Benefits Most
- Parents with young children, especially those under 18 or minors. The greater the number of dependents, the more cumulative exemption.
- Dual-income households with children: allows more real deduction where previously marginal tax rates meant little impact.
- Families balancing other deductions for care, rent, or education can now pair the larger exemption with existing credits.
Practical Tax Planning Tips
- Review family status forms early — ensure that for your combined income tax return in 2027, you properly list all eligible minors.
- Coordinate deductions: if both spouses earn income, ensure the parent with higher deductions or allowances claims this increased exemption.
- Income timing: additional income pushed into 2026 may now result in less net tax liability thanks to the bigger exemption. Avoid receiving lower-deductible income in 2026, if feasible.
- Simulate different scenarios: Use tax calculators to estimate whether accelerating certain income into 2025 (if still possible) or slowing some expenditures could shift you into lower tax brackets.
Example
Imagine a family with one working parent, earning NT$1,000,000 annually, and one minor child. Previously, the child exemption was NT$100,000; now it’s NT$150,000. So taxable income reduces by NT$50,000 more than before, saving tax at marginal rates (say 20%) equal to NT$10,000 in savings. If there are two children, savings double, etc.
Things to Watch Out For
- Changes are fixed for future years (starting 2026); retroactive claims to before 2026 are not allowed.
- You must still meet all conditions for dependency (residency, age, etc.) as per law.
- The benefit competes with other deductions — if you claim other child education or care-specific special deductions, the best combination of benefits requires careful planning.
Action Items Before Filing
- Check your household’s family status correctly.
- Gather proof – official documents showing dependency status.
- Consult with a tax advisor if your situation includes special entities like trusts or cross-border income.
- Use online tax tools or government-provided calculators once 2026 rates are available.
This amendment represents one of Taiwan’s more significant pro-family tax policy shifts in recent years. For families, thoughtful planning now can deliver meaningful tax relief and free up income for childcare or savings.
Category: Tax Planning
Tax Home: HKTaiwan
Author: NomadicTax Research Team
Read Time: 5–8 min
Published: true