On 11 September 2026, the President of Taiwan promulgated amendments to Articles 17 and 126 of the Income Tax Act, effective immediately. The revisions aim to reduce the tax burden on families with children by increasing the special deduction for preschool children and adjusting the dependent deduction thresholds. Article 17 now raises the annual special deduction per child aged 0-5 from NT$120,000 to NT$200,000, while Article 126 modifies the withholding tax calculation to reflect the enhanced deductions. This measure is part of the government’s demographic policy to encourage childbirth and support working parents amid declining fertility rates.
Key Takeaways
- Enhanced Child Tax Relief: Families with children aged five and under will see immediate reduction in taxable income, translating to an estimated average tax saving of NT$16,000 per child per year for middle-income households.
- Withholding Adjustment: Employers must update payroll systems to apply the new deduction rates for the remainder of the 2026 tax year, with the MOF issuing administrative guidance to ensure smooth implementation.
- Fiscal Impact: The MOF estimates the amendment will reduce annual tax revenue by approximately NT$25 billion, partially offset by increased labor participation incentives and long-term demographic benefits.
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