The annual tax-deductible allowance for basic living expenses could be raised to NT$213,000 per person for tax filers next year, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said on Friday.
In its presentation of last year’s household income and expenditure survey, the DGBAS said median disposable income per capita was NT$355,617, up 1.9 percent from the previous reporting year.
Using this figure, the tax-deductible allowance for basic living expenses per person should be about NT$213,000 for 2025 income tax purposes, a NT$3,000 increase from last year’s NT$210,000, it said.
Photo: CNA
According to the Taxpayer Rights Protection Act (納稅者權利保護法) passed in 2017, the government may not tax the amount people need for basic necessities, which is set at 60 percent of 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 be announced at the end of this year.
According to the tax system, if the basic living expenses allowance exceeds the sum of the personal exemption, standard deduction, and special deductions given to all taxpayers, the difference can be deducted from the taxpayer’s gross income.
This allowance is generally used by households with children filing taxes, because for single taxpayers and couples without dependents, the combined total of the basic exemption, and standard and special deductions is usually more favorable.
PwC Taiwan accountant Hung Lien-sheng (洪連盛) said that if the tax-deductible allowance for basic living expenses was increased by NT$3,000, a family of four consisting of a married couple and two underage children would see their total basic living expenses rise by NT$12,000.
That would effectively mean that an additional NT$12,000 of income would be tax-exempt, Hung said.
If the applicable income tax rate for such a household were 12 percent, they could save NT$1,440 in taxes, and if the applicable tax rate were 20 percent, they would pay NT$2,400 less in taxes, Hung said.
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