The annual tax-deductible allowance for basic living expenses could be raised to NT$209,000 (US$6,473) per person next year, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said on Friday.
In its Survey of Family Income and Expenditure for last year, median disposable income per capita was NT$349,000, up 3.7 percent from the previous reporting year, the DGBAS said.
Based on that figure, the tax-deductible allowance for basic living expenses per person should be about NT$209,000 for this year’s income tax purposes, a NT$7,000 increase from NT$202,000 for last year, the statistics agency said.
Photo: Clare Cheng, Taipei Times
Under the Taxpayer Rights Protection Act (納稅者權利保護法), the government is prevented from taxing the amount people need to purchase basic necessities, which is set at 60 percent of the median per capita disposable income from the preceding year.
The Ministry of Finance said the exact figure for the adjusted tax deductible allowance for basic living expenses would officially be announced at the end of this year.
Under the tax system, if the basic living expenses allowance exceeds the combined personal exemption, the standard deduction and special deductions, the difference can be deducted from gross income.
This allowance is generally used by households in which there are children, because for single people and couples without dependents, the basic exemption and standard deduction is usually more favorable, totaling NT$216,000 per person for the 2023 fiscal year.
However, exemptions per dependent for last year were NT$92,000 per person in most cases, while the basic living expense allowance can be claimed for each person in a tax return, including dependents.
Meanwhile, the gap in disposable income between the top and bottom 20 percent of income earners in Taiwan is the narrowest it has been since 2019, the Survey of Family Income and Expenditure showed.
Average disposable income per household last year was NT$1.137 million, up 2.5 percent from 2022, and average disposable income per capita was NT$407,000, up 4 percent from a year earlier, the survey showed.
Average disposable income per household for the top 20 percent of income earners increased 2.6 percent from 2022 to NT$2.302 million, while for the bottom 20 percent it rose 3 percent to NT$376,000, it showed.
That means the income of the top 20 percent was 6.12 times higher than that of the bottom 20 percent, lower than 6.15 in 2022 and the lowest since 6.1 in 2019, the DGBAS said.
It was also the first time the ratio has declined year-on-year since 2017.
Taiwan is projected to lose a working-age population of about 6.67 million people in two waves of retirement in the coming years, as the nation confronts accelerating demographic decline and a shortage of younger workers to take their place, the Ministry of the Interior said. Taiwan experienced its largest baby boom between 1958 and 1966, when the population grew by 3.78 million, followed by a second surge of 2.89 million between 1976 and 1982, ministry data showed. In 2023, the first of those baby boom generations — those born in the late 1950s and early 1960s — began to enter retirement, triggering
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