The Legislative Yuan yesterday passed an amendment to the Income Tax Act (所得稅法) raising the tax exemption threshold for dependent minor children and expanding itemized deductions for social insurance premiums.
The amendment, which cleared its third reading, increases the tax exemption for dependent minor children by 50 percent to NT$151,500 (US$4,757).
It also removes the NT$24,000 annual limit on itemized deductions for insurance premiums for labor insurance, farmers’ health insurance, National Pension Insurance, and insurance for military personnel, civil servants and public-school teachers.
Photo: Tyrone Siu, Reuters
The new rules are to take effect retroactively from Jan. 1, meaning taxpayers would be able to apply the increased exemptions and expanded deductions when filing their income tax returns in May next year.
The Executive Yuan proposed the amendment on June 25 to alleviate financial pressure on families raising children and create a more family-friendly tax environment.
The 50 percent increase for minor children is modeled after the tax code, which already grants a 50 percent exemption increase for dependents over the age of 70.
During an initial review, Minister of Finance Chuang Tsui-yun (莊翠雲) said that the increased exemption for minor children would result in a tax revenue loss of about NT$8 billion, but would directly benefit an estimated 2.37 million households.
Under the previous regulations, only National Health Insurance premiums were exempt from the NT$24,000 annual itemized deduction cap.
The amendment expands this exemption to include the other forms of social insurance.
In addition, lawmakers passed a bipartisan attached resolution requiring the Ministry of Finance to study the feasibility of amending Article 17 of the act to alleviate the tax burden on wage earners.
The resolution aims to ensure that the original intent of special deductions for salary income is not eroded by regular wage growth.
The ministry is required to submit a report on its findings by the end of this year.
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