Taiwan’s Legislative Yuan has approved amendments to the Income Tax Act raising the tax-exempt allowance for minor children from TWD 101,000 to TWD 151,500 per child and removing the TWD 24,000 cap on itemised deductions for certain insurance premiums, with the changes applying to 2026 income tax returns filed in May 2027.
Taiwan’s Legislative Yuan on 21 August 2026 passed the third reading of amendments to Articles 17 and 126 of the Income Tax Act, increasing tax-exempt allowances for minor children and removing the TWD 24,000 cap on itemised deductions for certain insurance premiums.
Once promulgated by the President, the amendments will apply to the filing of individual consolidated income tax returns for 2026 (2025 income), which will take place in May 2027.
The Ministry of Finance said the amendments were proposed as part of the Executive Yuan’s “New Strategy for Taiwan’s Population – Family Support” initiative to address the declining birth rate. Under the “Further Tax Reductions for Families with Marriage and Children” measures, the tax-exempt allowance for minor children supported by a taxpayer will increase by 50% from 1 January 2026. The allowance will rise from TWD 101,000 to TWD 151,500 per child. An estimated 2.37 million people will benefit, with tax reductions expected to total approximately TWD 8 billion.
In addition, taxpayers supporting children aged six or under will be able to combine the above tax-exempt allowance with the special deduction for pre-school children. From the 2026 tax year, families with children aged six or under will be eligible for a special deduction of TWD 150,000 for the first child and TWD 225,000 for the second and subsequent children. When combined with the TWD 151,500 tax-exempt allowance, the total deductible amount will be TWD 301,500 for the first child and TWD 376,500 for the second and subsequent children. The measure is intended to substantially reduce the tax burden on families raising children. Together with other childcare allowances, support and welfare measures, it is intended to provide appropriate assistance to families and give people greater confidence in having and raising children.
The Ministry further explained that participation in social insurance schemes, including Labour Insurance, Farmers’ Health Insurance, National Pension Insurance, and insurance for military personnel, civil servants and teachers, forms part of the social security system. As participation in many of these schemes is compulsory by law and their insurance premiums are similar in nature to National Health Insurance premiums, the ruling and opposition party caucuses in the Legislative Yuan reached a consensus to remove the TWD 24,000 cap on itemised deductions for insurance premiums. Accordingly, premiums paid under Labour Insurance, Farmers’ Health Insurance, National Pension Insurance, and insurance for military personnel, civil servants and teachers will not be subject to the TWD 24,000 limit.
The Ministry of Finance said the revised provisions on tax-exempt allowances and itemised deductions for insurance premiums will apply when taxpayers file their 2026 individual consolidated income tax returns in May 2027. The Ministry will revise the relevant tax return forms and documents and instruct local National Taxation Bureaus to plan subsequent tax collection procedures and strengthen public communication to ensure that taxpayers and other stakeholders fully understand the changes.
This announcement was made 21 August 2026.
