TAIPEI: Taipei married couples will have the option of calculating their tax liability separately to save money when they file their income tax returns in May, according to an Income Tax Act amendment that was passed in the Legislature Tuesday.
Before the amendment, married couples were required to either file their taxes together, or calculate their tax liability on their salaries and earned income separately while combining their non-wage income. Either way, it constituted a “marriage tax penalty” because combined income is taxed at a higher level on a progressive tax rate system.
The latest amendment is based on a Constitutional Court ruling on Jan. 20, 2012, which said the requirement that married couples must report their income jointly runs counter to tax equality.
The Ministry of Finance has estimated that 650,000 of the approximately 2.8 million couples that usually file joint income taxes will benefit from the new policy.
It will translate into an average tax savings of NT$23,000 per year for each couple, according to ruling Kuomintang Legislator Lu Hsiu-yen.
