About 2.05 million Taiwanese households could benefit this year from an upward adjustment of the Directorate-General of Budget, Accounting and Statistics’ (DGBAS) basic living expense estimate, the agency said on Friday.
The Taxpayer Rights Protection Act (納稅者權利保護法) stipulates that households cannot be taxed on income they need to cover basic expenses, which is set at 60 percent of median disposable per capita income in the preceding year.
A DGBAS family income survey on Friday showed that the median disposable income was NT$320,000 last year.
Photo: Chiang Ying-ying, AP
Based on that figure, the basic living expense per person, which applies to taxpayers and their dependents, would be NT$192,000, or NT$10,000 higher than last year.
Tax regulations stipulate that when the basic living expense exceeds the combined personal exemption, standard deduction and special deductions, the difference between the figures would be excluded from a person’s taxable gross income.
For a family of four, the NT$40,000 cushion due to the higher basic living expense standard would allow them to save NT$500 in income tax at a 5 percent tax rate or NT$2,000 at a 12 percent tax rate.
Changes in the standard usually only result in tax savings for employed couples who file their taxes together and have at least one dependent person in their household — usually a child or a parent.
This year, the personal exemption was set at NT$88,000 and the standard deduction at NT$120,000, resulting in a total of NT$208,000 per adult. As that exceeds the NT$192,000 basic living expense standard, people filing taxes individually or as a couple without dependents would not save on taxes.
For couples with a child in their household or a parent under the age of 70, the personal exemption was NT$88,000 per dependent, resulting in a basic deduction of NT$504,000.
The exemption for a parent aged over 70 was NT$132,000.
CAUTION
Depending on other special deductions, such as for educational expenses or investment, total deductions for a couple with one child might still be under NT$576,000 — the combined basic living expenses for three people — which would give them a further deduction on their declared income.
However, the Ministry of Finance cautioned that the final median disposable per capita income and basic living expense figures would not be announced until the end of this year.
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