讀後心得

As the May tax season approaches, this year's comprehensive income tax filing will introduce three major tax reduction measures. Zhang Qijin, the Vice President of the Ernst & Young Family Office, pointed out that these measures include an increase in the basic living expenses, a special deduction for rent, and an expansion of the special deduction for preschool children. First, the basic living expenses will be raised to 210,000, benefiting larger households. Second, rent expenses will shift from itemized deductions to being able to be used in conjunction with the standard deduction, with the special deduction limit increased to 180,000, but with a wealth exclusion clause. Finally, the special deduction for preschool children will be expanded to those under 6 years old, with an increase in the deduction amount and the elimination of the wealth exclusion restriction, allowing families with children to benefit even more. Zhang Qijin suggests confirming the applicable deductions when filing taxes to maximize tax-saving effects.

The tax filing season in May is approaching, and there are three tax reduction measures for this year’s comprehensive income tax declaration. Experts indicate that these changes, which include an increase in the basic living expenses, a change in rental expenses to a special deduction, and an increase in the special deduction for preschool children, will provide tax relief benefits for large families, renters, and families with children.

• First, the first tax reduction measure is the "increase in basic living expenses." Experts mention that last year, basic living expenses were adjusted to 210,000 NT dollars, increasing by 8,000 NT dollars, which is particularly advantageous for large families. According to estimates from the Ministry of Finance, over 2 million households will benefit from this increase. According to regulations, if the declared household’s basic living expenses exceed the combined exemption and deduction amounts stipulated by the Income Tax Act, the excess can be further deducted from the comprehensive income for the year, allowing for some tax relief. For example, for a family of four, each member can additionally deduct 8,000 NT dollars this year, totaling an extra deduction of 32,000 NT dollars. Those subject to a 5% tax rate can save 1,600 NT dollars, while those subject to a 12% tax rate can save 3,840 NT dollars.

• Secondly, another significant change is the adjustment of rental deductions. In the past, rental expenses were categorized as itemized deductions, and if the standard deduction was chosen, rental expenses could not be deducted separately. This situation has often been criticized. However, since last year, rental expenses have been changed from "itemized deductions" to "special deductions," allowing them to be used in conjunction with the standard deduction. Additionally, the deduction limit has also been raised from 120,000 NT dollars to 180,000 NT dollars per year. However, experts remind us that the rental special deduction excludes "shell families" and has means testing; those whose comprehensive income tax rate exceeds 20% or whose basic income exceeds 7.5 million NT dollars are not eligible. Renters may worry that if they report rental expenses, they may face rent increases from landlords despite the tax deduction. The Ministry of the Interior emphasizes that according to the lease agreement, landlords cannot restrict tenants from declaring rental expenses, and violations can be reported to relevant authorities, facing penalties under consumer protection laws.

• Lastly, the scope of the special deduction for preschool children has been expanded, the amount has increased, and the means testing requirement has been removed, which is good news for families with children. The age range for the special deduction for preschool children has been expanded to those under the age of 6. For children born after January 1, 2018, the deduction for the first child has increased from 120,000 NT dollars to 150,000 NT dollars, and for the second child and any subsequent children, it has increased from 120,000 NT dollars to 225,000 NT dollars. This means that more families can benefit from this tax reduction scheme.

Experts suggest that before filing taxes, taxpayers should verify the applicable deductions and brackets to fully utilize these tax relief benefits. For instance, families with young children need to confirm whether they meet the new standards for the special deduction for preschool children, while renters can calculate the applicability of the rental expense deduction to achieve optimal tax-saving results.