2026 tax small supplement tax reduction interpretation is effortless

        With the social structure moving towards aging and declining birth rates, tax planning has become a key focus of personal and family financial arrangements. This issue of 'Legal Column' provides a complete analysis of the two key tax system changes for 'basic living expenses' and' special deduction for long-term care 'in 2026 (reporting income for the year 2025), helping you easily complete your annual reporting tasks.

        Looking back at the past five years, the two taxable expenses of "basic living expenses" and "special deduction for long-term care" have increased from NTD 192000 per person to NTD 213000, with a cumulative increase of about 10.9%. Among them, NTD 3000 will increase in 2025 compared to 2024 (an increase of about 1.43%), estimated to benefit 2.02 million households; During the same period, the 'Long term Care Special Deduction' was maintained at NTD 120000 until 2024, and was increased to NTD 180000 in 2025, an increase of NTD 60000 (up 50%) from the previous year. It is estimated that about 350000 households will benefit this year.

                Basic living expenses

        Basic living expenses "are the expenses incurred by each person annually to maintain their basic livelihood, and therefore are not subject to taxation. Taking Xiao Ming's family of four as an example, he and his wife have two children who are studying in junior high school. If there are no other special deductions in the family, the basic living expenses that can be waived for the whole family in 2025 are as follows:

        1. Total basic living expenses for the whole family: NTD 213000 x 4 people=NTD 852000.

        2. Total family tax exemption and deduction amount: NTD 650000, including--

        Tax exemption for 4 people: NTD 97000 x 4 people=NTD 388000.

        The standard deduction for couples is NTD 262000.

        3. The basic living expenses of Xiaoming households (NTD 852000) are greater than the tax-free/deductible amount (NTD 650000), and the difference of NTD 202000 can be deducted from the total income. In other words, families with more people have higher basic living expenses and receive more deductions.

        Long term care special deduction amount

        What is the 'special deduction for long-term care'? According to the Ministry of Health and Welfare, if there are elderly or disabled family members who need long-term care, and the expenses for medical care, consumables, or hiring caregivers are considerable, in order to reduce family pressure, those who meet the following regulations can directly deduct a certain amount when filing taxes. (If there are any changes, please refer to the latest announcement from the Ministry of Health and Welfare)

        Qualified to hire foreign caregivers.

        Stay at designated accommodation service institutions for up to 90 days throughout the year.

        Meet the disability level 2-8 of long-term care and use long-term care payment services.

        Assuming Xiaohua is a single, single parent office worker with an annual income of NTD 800000. Her father is bedridden due to a stroke and relies on the services of a long-term care institution. Xiaohua declared his father as a supporting relative, and the relevant expenses for the year 2025 are calculated as follows:

        1. The total basic living expenses of Xiaohua and her father: NTD 213000 x 2 people=NTD 426000.

        2. The total tax exemption and deduction amount for Xiaohua's family is NTD 723000.

        Tax exemption for 2 people: NTD 97000 x 2 people=NTD 194000.

        Single standard deduction amount: NTD 131000.

        Special deduction for salary income: NTD 218000.

        Long term care special deduction amount: NTD 180000 can be waived (the deduction amount in 2024 is NTD 120000).

        3. As the basic living expenses of Xiaohua (NTD 426000) are less than the tax-free/deductible amount (NTD 723000), NTD 723000 will be deducted from the total income.

        4. Xiaohua's annual income is NTD 800000. After deducting NTD 723000, the net income is NTD 77000. After calculating the progressive tax rate (5%), the actual tax paid is NTD 3850.

        This deduction includes the 'wealth exclusion clause', therefore if the progressive tax rate applicable to Xiaohua's annual net income exceeds 20% (inclusive), it is not applicable to the special deduction of NTD 180000.

        More detailed tax reporting regulations can be obtained through official channels such as the Ministry of Finance, the National Taxation Bureau, the Disability Level Consultation, and the Long Term Care Service Hotline for first-hand accurate information. (Source: Ministry of Health and Welfare, Ministry of Finance, National Taxation Bureau)

        Ministry of Finance Tax Portal: https://www.etax.nat.gov.tw/etwmain

        Ministry of Finance Electronic Declaration and Taxation Service Network: https://tax.nat.gov.tw/

        Note: Free service hotline for tax bureaus in various regions: 0800-000-321, consultation hotline for disability level and long-term care service: 1966.

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