On 11 September 2026, the Office of the President of Taiwan officially promulgated amendments to Article 17 and Article 126 of the Income Tax Act. The legislative package, previously passed by the Legislative Yuan on 21 August 2026, is designed to alleviate the tax burden on families with children by expanding deductible allowances and adjusting tax rate structures for household income. The amendments form part of the government’s broader demographic policy to encourage childbirth and support young families amid declining birth rates. The changes take effect from the 2026 tax year, with detailed enforcement rules to be issued by the Ministry of Finance (MOF). Taxpayers should note the revised special deduction for preschool children and the adjusted calculation of consolidated income tax for married couples filing jointly.
Key Takeaways
- Expanded Special Deduction for Preschool Children: Article 17 amendment increases the special deduction amount per preschool child, directly lowering taxable income for eligible households. The deduction now applies per child without the previous cap on the number of children, providing greater relief for larger families.
- Adjusted Tax Rate Structure for Consolidated Income: Article 126 revision modifies the progressive tax brackets applicable to consolidated household income, reducing the marginal tax rate for middle-income brackets where many dual-income families with children fall. This mitigates the “marriage penalty” effect in the tax code.
- Retroactive Application and Filing Guidance: The MOF has confirmed the amendments apply retroactively to the 2026 tax year. Taxpayers filing in May 2027 should use the new deduction amounts and tax brackets. The National Taxation Bureau will issue updated tax return software and calculation guidelines by March 2027.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement