In 2025, the Ministry of Finance in Taiwan has introduced several key updates to the income tax filing process. These changes are aimed at easing the financial burden on households, adjusting allowances and deductions, and updating methods for calculating property transaction income. Whether you’re an individual taxpayer, a business owner, or a tax professional, understanding these changes will be crucial for ensuring accurate and timely tax filing.
Key Tax Changes for the 2024 Year: A Breakdown of the New Rules
1. Increase in Exemptions, Deductions, and Tax Brackets
One of the major updates for the 2024 tax year is the increase in various tax exemptions, deductions, and tax brackets. These adjustments are designed to provide financial relief by increasing the amount of tax-free income and allowable deductions, thus reducing taxable income.
- Basic Living Expenses: The Ministry of Finance has raised the basic living expenses per person to NT$210,000. This adjustment will apply to all taxpayers, ensuring that more income can be shielded from taxation.
- Exemptions and Deductions: There are increases in exemptions and deductions, including standard or itemized deductions, and deductions for savings, investment, education, disability, and long-term care expenses. These changes will help reduce taxable income, ultimately lowering the total tax owed.
2. Preschool Special Deduction: Expanding Support for Families with Young Children
Starting January 1, 2024, the special deduction for preschool children has been expanded to include children up to the age of six. This update provides more financial support for families with young children.
- Deductions for Young Children: Taxpayers can claim:
- NT$150,000 for the first child.
- NT$225,000 for each subsequent child (a 50% increase).
- No Income Cap: The income cap that previously limited eligibility for this deduction has been removed. This means all families raising young children can benefit from this relief, reducing the economic burden on households.
3. Housing Rent Special Deduction: Supporting Renters without Property
Changes to the special deduction for housing rent aim to support renters, particularly those without their own homes. The new rules make it easier for tenants to claim deductions for rent paid on residential properties.
- Higher Deduction Limits: Starting in 2024, taxpayers who rent their homes and do not own property can claim a special deduction of up to NT$180,000 per year. This applies to rent paid by the taxpayer, their spouse, and dependents living in rented homes.
- Eligibility Criteria: To qualify for this deduction, the taxpayer and their family must not own property in Taiwan. The rent paid can be reduced by any government subsidies received for housing.
- Income Threshold for Exemption: This special deduction will not apply to taxpayers in higher income brackets. Specifically, if a taxpayer’s comprehensive income tax rate is 20% or higher, or if they have dividend income taxed at 28%, they will not be eligible for this deduction.
- Special Circumstances: In certain cases, even if a taxpayer owns property but rents another due to special circumstances, they may still be eligible for the deduction. The Ministry of Finance issued a ruling on December 3, 2024, outlining five specific scenarios in which taxpayers can claim this deduction even if they own a home.
4. New Rules for Calculating Property Transaction Income
The Ministry of Finance has introduced new guidelines for calculating income from the sale of property in the 2024 tax year. These rules aim to streamline the process and ensure property sellers are taxed fairly.
- Property Transaction Income Calculation: When selling property, taxpayers must provide documentation to verify the transaction details, including the sale price and original purchase cost. If these details are not provided or cannot be verified, tax authorities will calculate the income using a standardized method.
- Thresholds for Property Sales: A key component of the new rules involves property sales that exceed certain financial thresholds. These thresholds are set based on the total transaction amount (including parking spaces) or the price per square meter. If the transaction amount exceeds the threshold, tax authorities will calculate taxable income based on a proportion of the property’s value.
The regional thresholds for property sales are as follows:
◦Taipei City: Transaction amount over NT$60 million or price per square meter above NT$1.2 million.
◦New Taipei City: Transaction amount over NT$40 million or price per square meter above NT$750,000.
◦Other Cities: Transaction amounts and price thresholds are adjusted for regions like Taoyuan, Taichung, Tainan, and Kaohsiung, with specific limits for each.
- If the Thresholds are Not Met: If a property sale does not meet the threshold, tax authorities will apply a specific ratio to calculate income based on the property’s assessed value. This method varies by region and applies a percentage of the assessed value to determine taxable income.
5. Timely Filing and Online Resources
With these significant changes, the Ministry of Finance urges taxpayers to stay informed and use online resources to streamline the tax filing process. The Ministry encourages the use of mobile phones and computers for filing the 2024 comprehensive income tax return online.
The Ministry has developed a helpful online tool, National Tax Assistant, which provides real-time assistance for taxpayers. Additionally, a toll-free service line (0800-000-321) is available for anyone needing further help with tax filings.
Conclusion
The new changes introduced for the 2024 tax year aim to provide substantial financial relief to taxpayers, particularly for families with young children, renters, and property owners. By understanding these rules and utilizing available deductions and exemptions, taxpayers can reduce their liabilities and ensure compliance with Taiwan’s tax regulations.
If you have any questions or need assistance, it’s important to stay up to date with the latest information from the Ministry of Finance and consult a tax professional to ensure accurate and timely filing.
By planning ahead and understanding the new tax policies, you can make the most of available benefits and avoid unnecessary tax burdens. Stay informed, file on time, and benefit from the changes that are designed to alleviate financial pressures on households across Taiwan.
