Taipei: The annual tax-deductible allowance for basic living expenses could see an increase to NT$213,000 (US$7,092) per individual for tax filers in 2026, as announced by the Directorate-General of Budget, Accounting and Statistics (DGBAS) on Friday. In its recent presentation concerning the 2024 household income and expenditure survey, the DGBAS revealed that median disposable income per capita had reached NT$355,617, marking a 1.9 percent rise from the previous year.
According to Focus Taiwan, the DGBAS indicated that this increase in median income would likely result in the tax-deductible allowance for basic living expenses per person being set at approximately NT$213,000 for the 2025 income tax year. This marks a NT$3,000 rise from the NT$210,000 allowance in 2024. Following the Taxpayers' Rights Protection Act of 2017, the Taiwanese government is mandated not to tax amounts necessary for basic necessities, which are calculated at 60 percent of the prior year's median per capita disposable income.
The Ministry of Finance (MOF) stated that the finalized figure for the tax-deductible allowance adjustment would be formally announced by the end of 2025. Taiwan's tax structure permits taxpayers to deduct the difference from their gross income if the basic living expenses allowance surpasses the total of personal exemption, standard deduction, and special deductions.
This adjustment is particularly beneficial for households with children, as single taxpayers and childless couples typically find the combined total of basic exemptions and standard and special deductions more advantageous. PwC Taiwan accountant Hung Lien-sheng explained that a NT$3,000 increase in the allowance would result in a family of four, composed of a married couple and two children, experiencing a NT$12,000 rise in their total basic living expenses. Consequently, an additional NT$12,000 of income would become tax-exempt.
Hung further elaborated that a household facing a 12 percent income tax rate could save NT$1,440 in taxes, whereas a 20 percent tax rate would lead to a NT$2,400 reduction in their tax payments.