Case Studies
Taiwan’s 2026 Childcare-Focused Tax Reforms: What Families Need to Know
Taiwan has passed legislation increasing child-related tax reliefs to ease the burden on young families, with new rules taking effect in the upcoming tax filing period.
By NomadicTax Research Team • 5-8 min read • August 23, 2026
## Legislative Change: What Taiwan Did and Why
On **August 21, 2026**, Taiwan’s Legislative Yuan passed amendments to **Articles 17 and 126 of the Income Tax Act** designed to **reduce the tax burden on families with children**.([mof.gov.tw](https://www.mof.gov.tw/singlehtml/384fb3077bb349ea973e7fc6f13b6974?cntId=8b12f394a64e40959fd1f8e805ecf853&utm_source=openai)) The reforms are part of a broader strategy aimed at addressing **declining birth rates**, under the government’s “Family Support” policy. Benefits include:
- Increasing the **child tax exemption** for children under 18 by **50%**, from NT$101,000 to **NT$151,500** per child.([mof.gov.tw](https://www.mof.gov.tw/singlehtml/384fb3077bb349ea973e7fc6f13b6974?cntId=8b12f394a64e40959fd1f8e805ecf853&utm_source=openai))
- Allowing parents of children aged **six or younger** to **stack** the new exemption with existing **preschool special deduction**: first child enjoys a preschool deduction of **NT$150,000**, second and subsequent **NT$225,000**, plus the increased exemption. This substantially raises the deductible amount available.([mof.gov.tw](https://www.mof.gov.tw/singlehtml/384fb3077bb349ea973e7fc6f13b6974?cntId=8b12f394a64e40959fd1f8e805ecf853&utm_source=openai))
- Adjusting insurance premium deductions: insurance premiums paid under labor insurance, national health insurance, public servants’ insurance, etc., **no longer subject to the existing NT$24,000 cap** within itemised deductions.([mof.gov.tw](https://www.mof.gov.tw/singlehtml/384fb3077bb349ea973e7fc6f13b6974?cntId=8b12f394a64e40959fd1f8e805ecf853&utm_source=openai))
These changes apply to **tax filings in May 2027 for the 2026 tax year (“115年度”)**.([mof.gov.tw](https://www.mof.gov.tw/singlehtml/384fb3077bb349ea973e7fc6f13b6974?cntId=8b12f394a64e40959fd1f8e805ecf853&utm_source=openai))
## Impacts for Households: Who Benefits Most
- Families with multiple young children (especially two or more) will see **substantial tax reductions**. For example, owning two children under six, previously limited by preschool deduction and exemption caps, can now claim deduction + exemption of up to **NT$376,500** total.
- Upper income families paying high insurance premiums will also benefit thanks to the removed cap on deduction.
- Anticipated number of beneficiaries: approx. **2.37 million people**, and the total tax relief estimated at **NT$8 billion**.([mof.gov.tw](https://www.mof.gov.tw/singlehtml/384fb3077bb349ea973e7fc6f13b6974?cntId=8b12f394a64e40959fd1f8e805ecf853&utm_source=openai))
## Actionable Steps for Families
- **Claim new exemption/deduction**: When filing in May 2027, ensure you apply for the raised child exemption and preschool special deduction together for children aged ≤6.
- **Rework withholding or estimated tax payments** if you are an employee: the employer or tax authority may update withholding tables once law is promulgated—check your monthly paycheck deductions.
- **Compile insurance premium receipts** from all eligible mandatory insurance programs–prioritize documentation.
- Talk with your accountant if you itemize deductions—this change may alter whether standard vs itemised makes more sense.
## Example Scenarios
| Family Type | Before Reform | After Reform (for 2026 filings) |
|---|---|---|
| One child, aged 4 | Child exemption NT$101,000; preschool deduction NT$150,000 ⇒ combined ~ NT$251,000 deduction/exemption | Exemption now NT$151,500 + same preschool deduction ⇒ ~ NT$301,500 total—NT$50,500 more relief. |
| Two children aged 2 & 7 | Exemptions for both (2 x NT$101,000); only first child preschool deductible | Both get increased exemption (2 x NT$151,500); only child aged ≤6 gets preschool deduction of NT$150,000 ⇒ ~ NT$302,000 total. |
| High insurance contribution payer | Previously capped at NT$24,000 deductible, but likely hit ceiling | No cap → full eligible amounts deductible—greater savings depending on amounts paid. |
## Key Takeaways
- The reform is **significant** for young families and those paying large social insurance premiums.
- Document early: gather insurance receipts; keep child enrolment dates.
- Evaluate whether standard or itemised deduction route is optimal post-change.
- Although effective for 2026 filings, stay alert to tax authority guidance and updated forms.