Background & What’s Changing
On 25 June 2026, Taiwan’s Executive Yuan approved a draft amendment to Articles 17 and 126 of the Income Tax Act, increasing the income tax exemption (免稅額) for minor children (未成年子女) by 50%, aimed at easing financial pressure on families amid the country’s declining birthrate.
(mof.gov.tw)
Key points:
- Applies to minor children only.
- Effective from 1 January 2027 (民國115年1月1日) onward for assessment purposes.
- The benefit can be claimed at the 116年5月 income tax filing season (i.e. for comprehensive income tax returns filed at that time).
- Estimated impact: 2.37 million taxpayers will benefit, with total tax revenue loss of about NT$8 billion.
(mof.gov.tw)
Implications for Family Tax Planning
Here’s how families can prepare and optimize:
- Ensure proper documentation: Birth certificates and dependent status should be up-to-date and submitted during reporting.
- Project income levels: If your income is near taxable thresholds, increasing exemptions may shift you into a lower tax bracket. Plan investments, bonuses, and deductions accordingly.
- Time certain deductions: If there are child-related deductions or childcare expenses, align them with years you receive highest benefit from the increased exemption.
Practical Example
- Family X has two children aged 16 and 10. Previously, deduction per child was NT$X; with the increase, their taxable income drops significantly — savings might flow past thresholds where other allowances phase in or out.
- Family Y, with one child aged 17 and another just under 18, will benefit on the younger child exemption immediately; the older child’s exemption depend on age at year’s end.
Action Items Before Filing Season
- Parents should double-check the dependent child age and status by end of 2026.
- Compile all relevant supporting documents early.
- Use tax planning tools or consult advisors to simulate liability under the new exemption scheme.
- If expecting changes to family size or income, assess whether tuition, childcare, or other deductible expenses can be shifted or planned to maximize benefit.
Summary
This amendment is a medium-to-high impact change for Taiwan’s taxpayers with minor children. Those families will see immediate tax relief in the 2027 filing season (for income earned in 2027), contingent on declaring dependents correctly and keeping documentation in order.
Category: Case Studies
Author: NomadicTax Research Team
Read Time: 5 min