The tax season is approaching! If office workers earn passive income through stock investments, they must also declare dividend income for tax purposes. There are two taxation methods: "combined assessment" and "separate assessment." If your total income is below NT$983,000, opting for "combined assessment" allows you to benefit from a 3.5% tax rate difference.

On the other hand, if your income is high and falls under the 40% tax bracket, you may choose "separate assessment," with dividends taxed at a 28% rate. According to the income tax law, dividend income must be included in the total income for taxation but can enjoy an 8.5% deduction on dividend amounts, with a maximum deduction of NT$80,000 per taxpayer. Thus, individuals with total dividends below NT$940,000 can benefit from this reduction.

For the average single individual, when personal tax exemption is NT$97,000, standard deductions NT$131,000 (doubles for married persons), and special deductions for salary and disability NT$218,000 are considered, total income below NT$983,000 will subject all income (including dividends) to a 5% tax bracket. Therefore, this leads to the situation of “the more dividends received, the more tax savings.”

However, those with total income exceeding NT$983,000 are taxed at rates between 12% and 40%, meaning they may end up paying more taxes. This is why some investors avoid receiving dividend payments to reduce their tax burden. For those whose total income fits into the 40% tax bracket, it is advisable to opt for separate assessment for better tax efficiency.