Taiwan's 6% voluntary pension top-up: tax saved by bracket, and who should skip it

Setting aside NT$2,748 from your pay each month, into an account you cannot withdraw from before age 60, means paying less income tax each year. How much less depends on your tax rate: the same money saves about NT$1,649 in the 5% bracket and about NT$13,190 in the 40% bracket, a difference of roughly eight times.

This is the basic arithmetic of the "voluntary personal contribution" under Taiwan's labour pension system. According to the Bureau of Labor Insurance (BLI) under the Ministry of Labor, as of October 2026, workers under the new scheme can voluntarily contribute up to 6% of their monthly wage, on top of the employer's mandatory contribution. From 17 July 2026, workers who remain under the old scheme can also contribute voluntarily, but the Ministry of Labor's press release does not mention the tax treatment. The sections below go through the official information point by point.

Where the tax saving comes from: deducted from salary income before tax is calculated

Article 14 of the Labor Pension Act provides that voluntary contributions are "not included in the salary income of the contribution year for tax purposes"; for the self-employed, the contribution is not counted as business income. In other words, the money is deducted from income first, and tax is calculated on what remains.

The BLI's example is a monthly salary of NT$45,000, which corresponds to a monthly contribution wage bracket of NT$45,800. A 6% contribution is NT$2,748 a month, and the full-year NT$32,976 can be deducted from total salary income. At a 5% tax rate, the saving is about NT$1,649.

According to the Ministry of Labor, the contribution rate can be set anywhere from 1% to 6%, so the ceiling is 6% of the monthly wage.

By tax bracket: the annual saving

The BLI gives only a single example at the 5% rate and no full table of savings. The table below was worked out by our editorial team by multiplying the same example's annual contribution of NT$32,976 by each tax rate. It is not an official figure (as of October 2026):

• 5% tax rate: about NT$1,649 saved a year
• 12% tax rate: about NT$3,957 saved a year
• 20% tax rate: about NT$6,595 saved a year
• 30% tax rate: about NT$9,893 saved a year
• 40% tax rate: about NT$13,190 saved a year

This table applies only to a monthly contribution wage of NT$45,800; with a different salary, both the contribution and the saving will differ. To find your own bracket, look at your net consolidated income, not your gross salary.

According to the Taipei National Tax Administration of the Ministry of Finance, the net consolidated income brackets for the 2026 tax year (year 115 in the Republic of China calendar, covering 2026 income) are as follows:

• NT$0 to 610,000: 5%, progressive difference NT$0
• NT$610,001 to 1,380,000: 12%, progressive difference NT$42,700
• NT$1,380,001 to 2,770,000: 20%, progressive difference NT$153,100
• NT$2,770,001 to 5,190,000: 30%, progressive difference NT$430,100
• NT$5,190,001 and above: 40%, progressive difference NT$949,100

Note that the filing year and the income year differ. The return filed in May 2026 covers income for year 114, and uses the year 113 to 114 brackets, whose upper limits are NT$590,000, 1,330,000, 2,660,000 and 4,980,000 in turn. Income earned in 2026 is filed in May 2027 and uses the year 115 brackets.

Several deductions used to work out the net figure have also been raised for year 115. On 27 November 2025 the Ministry of Finance announced that the exemption per person rises from NT$97,000 to NT$101,000; the standard deduction from NT$131,000 to NT$136,000, doubled for those with a spouse; and the special salary deduction from NT$218,000 to NT$227,000.

The rate can be changed twice a year, and employers may not refuse

According to the Ministry of Labor, the contribution rate can be changed at most twice within a year. The BLI adds that a change takes effect on the first day of the month after it is filed, and the count is based on the year before the change takes effect. You can stop contributing at any time by submitting a form.

Employers may not refuse to process a worker's voluntary contribution. They must notify the worker of the contribution amount on the payslip or in writing or electronically, and issue a receipt at the end of the year.

The cost: money locked in until age 60

Workers can claim their labour pension only at age 60. Voluntary contributions, like the employer's, cannot be taken out early (this point is relayed from the BLI's Q&A; the relevant provision is Article 24). This is the main cost of contributing: the tax saving is visible in the same year, but the money cannot be used before age 60.

On withdrawal, the BLI says, retirement income tax is payable only on the part that exceeds the retirement income tax exemption.

Lump sum or monthly pension: no change once chosen

Article 24 provides that people aged 60 or over with at least 15 years of contributions can choose a monthly pension or a lump sum; those with fewer than 15 years can take only a lump sum. Years of service are counted as actual contribution years. Whichever is chosen, it cannot be changed once the BLI has approved payment.

• Lump sum: paid within 30 days of receiving the complete application documents.
• Monthly pension: paid from the month after the application is received, in quarterly instalments. The amount is calculated from the principal and earnings in the individual account, using the annuity life table, average life expectancy and interest rate, and is paid until the end of average life expectancy. The BLI Q&A gives the example that average life expectancy at 60 is 23 years, meaning payments until age 83 (relayed, not checked against the original Q&A page).

Returns are only a historical reference

The BLI states that the new-scheme pension fund has earned an average return of 7.64% since it was set up, and an average of 10.28% for years 110 to 114. These are historical figures and do not guarantee future performance. A Ministry of Labor page adds that there is a minimum return guarantee on withdrawal, and that each year contributors can share in the fund's investment earnings distribution.

The Ministry of Labor's worked example is a 35-year-old worker earning NT$40,000 a month with NT$300,000 already in the account, contributing 6% a month for 30 years. By age 65 the account could reach about NT$7.43 million, around NT$2.83 million more than without voluntary contributions. This is an illustrative assumption, not a guarantee.

New rule for old-scheme workers: they can contribute, but the press release does not mention tax

On 15 July 2026 the Ministry of Labor issued amendments to Articles 21-2, 21-3 and 21-4 of the Enforcement Rules of the Labor Pension Act, effective 17 July 2026. Workers who chose to stay under the old scheme (pure old-scheme workers) can voluntarily contribute up to 6% of their monthly wage, and their pure old-scheme status does not change.

After contributing, if they meet the retirement conditions under the Labor Standards Act, employer and employee may agree to settle the old-scheme retirement pay early. The settled amount must be paid in full into the individual pension account at the BLI, and the worker may not withdraw it.

The Ministry of Labor's press release does not say whether voluntary contributions by pure old-scheme workers are tax-deductible. Until officials clarify, do not assume that the savings table above applies to them.

Who should not contribute

• People who may need the money before age 60: voluntary contributions cannot be withdrawn before 60.
• People in the 5% bracket: on the BLI example the annual saving is about NT$1,649, a relatively small sum, so the decision should weigh the lock-in against long-term accumulation.
• Pure old-scheme workers whose main aim is tax saving: the press release does not address tax treatment, so check first with the authorities or a professional.

The tax saving is visible, while the cost of locked-up money is easy to overlook. Work out which bracket your net consolidated income falls into, then decide on a contribution rate; the rate can be changed twice a year, and you can stop at any time. This is general information for Taiwan as of October 2026; for personal tax questions, consult a licensed accountant or tax professional.

Prices and details correct as of October 2026

This article is general information, not investment, tax or insurance advice. Everyone’s circumstances differ; consult a licensed professional before making decisions.