Tax Planning
Maximizing Tax Savings for Families in Taiwan After the New Child Dependency Benefit
Taiwan’s recent amendment to the Income Tax Act boosts the exemption for minor children by 50% — here’s how families can optimize deductions and timing as the change takes effect from January 1.
By NomadicTax Research Team • 5-8 min read • August 10, 2026
## What’s New
In the revision to Taiwan’s **Income Tax Act** (Articles 17 & 126), the Executive Yuan passed a draft increase of the dependent minor child exemption by **50%**, aimed at easing the financial burden on families and encouraging population growth. The changes are effective from **January 1, 2026** and will be claimable during tax filings in **May 2027**. Approximately **2.37 million** people are estimated to benefit, with about **NT$8 billion** in tax reductions in total. ([mof.gov.tw](https://www.mof.gov.tw/singlehtml/384fb3077bb349ea973e7fc6f13b6974?cntId=e88b59b51f844142a21d18f43117b3bb&utm_source=openai))
## Actionable Tax Planning for Families
- **Timing Matters**: Since the exemption increase applies from January 1, ensure that child-related expenses and documentation are aligned to calendar year rather than fiscal year differences.
- **Documentation**: Keep clear records proving dependency and age for minors—birth certificates and school enrollment records become useful to validate exemption claims.
- **Filing Strategy**: Examine whether it's better to file jointly (if married) or separately, depending on each parent’s income, as exemptions and progressivity may lead to different outcomes.
- **Estimate Savings**: Using Taiwan’s progressive tax rates, families with higher marginal rates will benefit more. For example, someone taxed at 20% with one child under 18 would see a NT$1,000 exemption increase translated to a NT$200 tax saving, versus someone taxed at 12% saving NT$120.
## Implications for Employers & Tax Advisors
- **Payroll Systems**: Employers should adapt withholding tables or guidance once the law is confirmed, to reflect new dependent exemption thresholds.
- **Advisory Role**: Tax professionals should alert clients to claim the increased exemption and look for other supportive deductions like special child-care or education credits that often accompany such policy shifts.
## Comparison: Hong Kong’s Strategy
While Taiwan is boosting dependent exemptions, Hong Kong in the **2026–27 Budget** increased basic allowances too. For example:
- Basic allowance rose from HK$132,000 to **HK$145,000**
- Married person allowance from **HK$264,000** to HK$290,000 ([ird.gov.hk](https://www.ird.gov.hk/chs/faq/budget2026_27.htm?utm_source=openai))
Some families operating across both jurisdictions may find strategically timing residency or income sourcing to benefit from both systems.
## Takeaway
Families in Taiwan should prepare to leverage the increased child dependent exemption from **fiscal year 2026**, gathering necessary documentation now and adjusting withholding/filling behavior. Tax professionals and employers should ready systems to reflect changes. This amendment is a clear win for family-oriented taxpayers and contributes to Taiwan’s broader policy goals on population support.