How does Taiwan payroll tax work in 2026?
Your worker pays 0% toward their statutory pension in Taiwan. You as the employer fund it alone, at 6% of monthly salary into an individual account the worker keeps for life. On top sit Labor Insurance, National Health Insurance, and income tax that climbs to 40% across five bands.
· Taiwan guide
Illustration · Taipei, Taiwan
Taiwan payroll has four moving parts. The employer pays into the worker's pension at 6% of salary. Labor Insurance and National Health Insurance are split between employer and worker.
The worker contributes 0% to the statutory pension. So pension is an employer cost, not a worker deduction. The worker still pays their share of Labor Insurance and health cover.
Income tax (PAYE-style) runs across five bands. It starts at 5% and rises to 40% on the highest pay. Wages must be paid at least twice a month, and there is no statutory 13th-month salary (Labor Standards Act art. 29).
What does an employer pay in Taiwan payroll taxes?
The employer funds the worker's pension at 6% of monthly salary. That money goes into an individual account the worker keeps for life.
The employer also pays a share of Labor Insurance and National Health Insurance. The pension share is the only one the law fixes as a clean single rate (Labor Pension Act art. 14).
| Employer contribution | Rate | Applies to |
|---|---|---|
| Labor Pension (individual account) | 6% | Monthly insured salary, paid into the worker's own pension account |
| Labor Insurance (employer share) | Set by the BLI rate table | Insured salary up to the BLI ceiling |
| National Health Insurance (employer share) | Set by the NHIA rate table | Insured salary, with a dependant component |
The pension is the employer's bill
The Labor Pension Act sets the employer contribution at 6% of monthly salary. It is not a deduction from the worker. The employer pays it on top of gross pay into the worker's individual pension account, run by the Bureau of Labor Insurance. The worker carries that account between jobs.
Labor Insurance and health cover
Two more employer charges sit alongside the pension. Labor Insurance, run by the Bureau of Labor Insurance, covers injury, sickness, and old-age benefits. National Health Insurance, run by the National Health Insurance Administration, covers medical care. Both are split between employer and worker, and both apply to an insured salary banded against an official table. The split and the current rates change with the official tables, so the exact employer rate is confirmed against the live BLI and NHIA schedules for 2026, not stated here as a fixed figure. Teamed reads the current tables on every Taiwan payroll run.
What does an employee pay from their Taiwan salary?
The worker pays 0% toward the statutory pension. The employer funds that part alone.
The worker does pay a share of Labor Insurance and National Health Insurance. Those come off pay before income tax.
| Worker deduction | Rate | Applies to |
|---|---|---|
| Labor Pension (mandatory) | 0% | No mandatory worker pension contribution; up to 6% voluntary is allowed |
| Labor Insurance (worker share) | Set by the BLI rate table | Insured salary up to the BLI ceiling |
| National Health Insurance (worker share) | Set by the NHIA rate table | Insured salary, plus any dependants |
No mandatory pension deduction
Taiwan does not force a worker pension contribution. The mandatory worker rate is 0%. A worker may choose to add up to 6% of their own salary into the pension account, and that voluntary amount is tax deductible, but it is the worker's call. The employer cannot make it compulsory (Labor Pension Act art. 14).
What still comes off pay
The worker share of Labor Insurance and National Health Insurance is deducted each pay run. Both are set by the official BLI and NHIA rate tables against a banded insured salary, so the worker share moves with the table rather than a starting rate. These deductions reduce gross pay before income tax is worked out. The current 2026 worker shares are confirmed against the live BLI and NHIA schedules on every run.
Taiwan income tax bands for 2026
Individual income tax runs across five bands. The first band is 5%. The next bands rise through 12%, 20%, and 30%.
The top band is 40% on the highest net taxable income. The 2026 thresholds were raised from 2025 (Income Tax Act).
| Net taxable income (NT$) | Rate |
|---|---|
| 0 to 610,000 | 5% |
| 610,001 to 1,380,000 | 12% |
| 1,380,001 to 2,770,000 | 20% |
| 2,770,001 to 5,190,000 | 30% |
| 5,190,001 and above | 40% |
Taiwan taxes individual consolidated income on a yearly basis, with employer withholding through the year and a final reconciliation in the May filing season. The bands above run on net taxable income, which is gross income less personal exemptions, the standard or itemised deductions, and a special earned-income deduction. Each band uses a progressive difference under the official table, so a worker is never taxed at the top rate on their whole income, only on the slice that falls in the highest band.
What comes off before income tax
Income tax is charged on net taxable income, not gross pay. The worker share of Labor Insurance and National Health Insurance, plus any voluntary pension contribution, reduce the figure that tax is worked out on. Get the order wrong and the tax figure is wrong, even when every rate is right. The 2026 brackets were confirmed against the National Taxation Bureau of Taipei 2026 progressive-rate table, which raised the thresholds from the 2024 to 2025 levels.
How does Taiwan payroll filing and withholding work?
Wages must be paid at least twice a month unless the contract sets monthly pay, and every payslip must itemise how pay was worked out.
Employers withhold income tax and the worker share of Labor Insurance and health cover each run, then remit to the tax authority and the insurance bureaus.
Wages must be paid at least twice a month unless the parties agree otherwise or wages are paid monthly in advance, and the employer must give the worker a payslip showing how each wage was worked out. The employer must also keep payroll records for at least five years.
Taiwan has no single real-time filing system the way the UK does. Instead the employer runs several streams that land on different cadences:
- Income tax withholding taken from each pay run, remitted to the tax authority, and reconciled in the annual filing season.
- Labor Insurance reported and paid to the Bureau of Labor Insurance against the worker's insured salary band.
- National Health Insurance reported and paid to the National Health Insurance Administration, including any dependant cover.
- Labor Pension at 6% paid into the worker's individual pension account, monthly.
Each stream has its own portal, deadline, and penalty regime. A worker hired mid-month has to be enrolled with each bureau before their first run, or the employer carries the liability. Wages are paid at least twice a month by default, so the cadence inside one month matters as much as the monthly close.
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Collect pay data
Gather salary, hours, overtime, and any taxable allowances for the pay period before the run closes.
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Enrol with each bureau
Make sure the worker is registered for Labor Pension, Labor Insurance, and National Health Insurance before their first run, or you carry the liability.
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Apply pre-tax deductions
Take the worker share of Labor Insurance and health cover, plus any voluntary pension, before income tax. The order changes the taxable figure.
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Withhold income tax
Apply the income tax bands to net taxable income, then withhold the right amount for remittance to the tax authority.
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Fund the pension
Pay the employer pension contribution into the worker's individual account on top of gross pay. This is your cost, not a deduction.
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Remit and reconcile
Pay each stream to its bureau on its own deadline, then reconcile income tax in the annual May filing season.
Pension and social insurance in the Taiwan payroll stack
Labor Pension is the core retirement layer. The employer pays 6% of salary into the worker's own account, and the worker's mandatory share is 0%.
Labor Insurance and National Health Insurance sit alongside it, split between employer and worker (Labor Pension Act art. 14).
The Taiwan retirement and social layer has three pieces that all run through payroll:
- Labor Pension is the individual-account retirement scheme. The employer contributes 6% of monthly salary. The worker may add up to 6% voluntarily, but the mandatory worker rate is 0%.
- Labor Insurance covers occupational injury, sickness, maternity, and old-age benefits. It is split between employer and worker against a banded insured salary.
- National Health Insurance covers medical care for the worker and registered dependants. It is also a shared contribution against insured salary.
The pension is the simplest line to price, because the law fixes the employer rate at 6%. Labor Insurance and health cover are harder, because their rates and the insured-salary ceiling move with the official BLI and NHIA tables and are confirmed against the live 2026 schedules rather than carried here as fixed numbers. That is the single biggest source of a surprise on a Taiwan employer-cost estimate.
Why the worker keeps the account
Under the new pension system, contributions go into an account in the worker's name, not a company fund. The worker carries it between employers and draws on it in retirement. Severance under the same system is half a month's average wage per full year of service, capped at six months. So the pension percentage and the severance rule both trace back to the Labor Pension Act, and both are confirmed before any Taiwan hire goes live.
How does Teamed handle Taiwan payroll for you?
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Real HR and legal experts handle your Taiwan hires, from the first contract through every pay run, bureau enrolment, and the annual income tax reconciliation. An actual person, not a chatbot or a pooled queue. There is no setup fee and no exit fee. Employer cost passes through at cost, itemised on every invoice, so you see the pension, Labor Insurance, and National Health Insurance as separate lines, never a blended figure.
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Key sources: the Labor Standards Act, the Labor Pension Act, and the National Taxation Bureau of Taipei 2026 tax table.
Frequently asked questions
What does an employer pay in Taiwan payroll taxes in 2026?
The employer funds the worker's Labor Pension at 6% of monthly salary, paid into an individual account the worker keeps. The employer also pays a share of Labor Insurance and National Health Insurance, both set by the official BLI and NHIA rate tables against a banded insured salary, so confirm the live 2026 schedules for those two.
How much pension does a Taiwan employee pay?
The mandatory worker pension contribution in Taiwan is 0%. The employer funds the full 6% pension contribution alone. A worker may choose to add up to 6% of their own salary voluntarily, and that amount is tax deductible, but it is never compulsory.
What are the Taiwan income tax bands for 2026?
Individual income tax has five bands: 5% on net taxable income up to NT$610,000; 12% to NT$1,380,000; 20% to NT$2,770,000; 30% to NT$5,190,000; and 40% above that. The 2026 thresholds were raised from the 2024 to 2025 levels.
How often must wages be paid in Taiwan?
Wages must be paid at least twice a month unless the contract sets monthly pay or wages are paid monthly in advance. Every payslip must itemise how pay was worked out, and the employer must keep payroll records for at least five years (Labor Standards Act art. 23).
Does Taiwan have a 13th-month salary?
No. Taiwan has no statutory 13th-month or 14th-month salary. Any year-end bonus is discretionary and payable only out of net profits after tax and loss-cover, to workers who served the full year (Labor Standards Act art. 29). The Lunar New Year bonus that many firms pay is market custom, not a legal requirement.
What is the minimum wage in Taiwan in 2026?
From 1 January 2026 the monthly minimum wage is TWD 29,500/month and the hourly minimum wage is TWD 196/hour. Standard working hours are capped at 40 hours per week under the Labor Standards Act.
The most common Taiwan payroll surprise we see is treating the pension percentage as the whole employer cost. It is the only rate the law fixes cleanly. Labor Insurance and National Health Insurance move with the official tables every year, and they are where a Taiwan employer-cost estimate quietly drifts off if nobody reads the current schedule.
Taiwan flips the usual pension setup. The worker's mandatory share is 0%, and you as the employer fund the whole pension at 6%.
Income tax runs five bands to 40%, and there is no statutory 13th-month salary.
Price Labor Insurance and health cover from the current tables before you commit.
