Tax Allowance Update in Taiwan

Taipei, CNA—On Friday, August 16th, the Bureau of Budget, Accounting and Statistics (DGBAS) indicated that the annual tax-deductible allowance for basic living expenses could rise to $213,000 (approximately US$7,092) for those filing tax returns in 2026.

During the 2024 household income and expenditure survey presentation, DGBAS reported a 1.9% increase in the median disposable income per capita, now standing at $355,617, compared to the previous year.

Based on this data, the DGBAS estimates that the per-person tax-deductible allowance for basic living expenses will increase by about $3,000 to reach $213,000 for the 2025 tax year, up from NT$210,000 in 2024.

In line with the Taxpayer Rights Protection Act, enacted in 2017, the Taiwanese government will avoid taxing the amount individuals need to cover basic necessities, which is set at 60% of the median disposable income from the prior year.

The Ministry of Finance (MOF) plans to announce the definite amounts for the adjusted tax-deductible allowances for basic living expenses at the end of 2025.

According to Taiwan’s tax regulations, if the basic living allowance exceeds the total of individual exemptions, standard deductions, and special deductions available to taxpayers, the difference can be deducted from their total income.

This allowance is typically utilized by households where children are filing taxes, as the combined exemptions and deductions often favor single taxpayers and couples without dependents.

Hung Lien-Sheng, an accountant at PWC Taiwan, noted that if the tax-deductible allowance for basic living expenses increases by $3,000, families, such as a couple with two minor children, would see their allowance rise by $12,000.

This would effectively mean an additional NT$12,000 of income is tax-free, according to Hung. He also mentioned that for households facing a 12% income tax rate, this could save them NT$1,440 in taxes, while those at a 20% rate would owe NT$2,400.