Elevated consumer prices could drive the government to raise basic living expenses and personal income tax deductions later this year to help ease people’s financial burden in time for the tax season in May next year, accountants said yesterday.
The Ministry of Finance is due to revise the standard reductions by the end of the year so people have new benchmarks when they file income taxes.
As of last month, the consumer price index had increased 5.034 percent, steeper than the statutory 3 percent to set off living expenses adjustments from the previous review in late 2021, the Directorate-General of Budget, Accounting and Statistics said.
Photo: CNA
The inflation data would obligate the ministry to lift the deduction amount by NT$5,000 from NT$92,000 to NT$97,000 on personal income tax alone, Ernst & Young Taiwan (安永台灣) said in a note.
The standard deduction for single filers would rise by NT$6,000 from NT$124,000 to NT$130,000, while the special deduction for wage and salary earners and people with disabilities would be increased by NT$10,000 from NT$207,000 to NT$217,000, the firm said.
The adjustments would translate into noticeable tax savings for a family of four on double incomes, it said, pointing out that they can file an extra NT$20,000 in personal income deductions, NT$12,000 in standard deductions and another NT$20,000 in special deductions.
That would suggest an overall tax saving of NT$2,600 from a year earlier for people paying an income tax rate of 5 percent, Ernst & Young Taiwan said.
The tax savings would amount to NT$2,100 for family of two without children on double incomes, it said.
Single working people could save between NT$1,050 and NT$8,400 in taxes depending on their income levels, it said. Married couples enjoy higher deductions.
Minister of Finance Chuang Tsui-yun (莊翠雲) earlier told a legislative hearing that upward living expense adjustments are highly likely later this year in light of consumer price trends. The ministry is to arrive at its final conclusions in November.
Higher inflation means the government needs to give people more leeway in dealing with their tax payments, analysts said.
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