Taiwan's Legislative Yuan gave third reading to amendments to the Income Tax Act. There are two core provisions. Premiums for compulsory social insurance — labour insurance, farmers' insurance, national pension and military-civil-service-teacher insurance — become fully deductible with no ceiling, as health insurance premiums already are. And the exemption amount for minor dependent children rises by 50 percent.

When it takes effect, and how it is felt

The changes apply from next May's comprehensive income tax filing, meaning premiums paid and dependants supported this year are reflected in next year's return. More deductible items lower taxable income, so the amount actually owed falls even within the same bracket.

Previously only health insurance premiums were deductible in full without a cap, with other social insurance premiums deductible only within a separate limit. Removing that limit widens the deduction most for employees carrying the heaviest premium burden.

Who benefits

The higher child exemption acts directly on households raising children, with a clear character as a tax incentive responding to falling birth rates. Because exemptions concentrate their effect among those actually paying income tax, critics note the benefit is limited for low-income households.

On the fiscal side, lower revenue is unavoidable. The Executive Yuan and the legislature have differed over the scale of tax cuts and available fiscal room, and debate over funding is expected to continue after passage.

The same rules apply to Korean and Chinese nationals and student families resident in Taiwan who file income tax there. Residents qualify for the deductions regardless of nationality.