Can You Deduct NT$1.38 Million in Funeral Expenses for Inheritance Tax Even If You Only Spent NT$300,000? The Ministry of Finance Clarifies the Rules

After a family member passes away, heirs must not only handle funeral arrangements but also file inheritance tax returns. Suppose a funeral actually costs only NT$300,000—does this mean the funeral expense deduction on the inheritance tax return is limited to NT$300,000? Not necessarily. According to current regulations from the Ministry of Finance, for deaths (inheritance commencement dates) occurring in 2026 (Minguo Year 115), the funeral expense deduction is set at NT$1.38 million. For most cases, regardless of the actual funeral expenses incurred, the deduction is uniformly calculated as NT$1.38 million, and taxpayers are not required to submit invoices or receipts totaling NT$1.38 million to claim the deduction. In other words, even if the actual funeral cost was only NT$300,000, the full NT$1.38 million can still be claimed as a funeral expense deduction when filing inheritance tax. Conversely, even if actual funeral expenses reached NT$2 million due to higher costs for memorial services, funeral services, or columbarium niches, the deduction remains capped at NT$1.38 million and does not increase proportionally.

Can you deduct NT$1.38 million in inheritance tax if your funeral only cost NT$300,000?

The answer is yes. The Ministry of Finance’s Tax Portal website states that the funeral expense deduction is a fixed amount of NT$1.38 million, regardless of actual expenditure, and no supporting documents are required. Therefore, this rule does not require families to itemize actual payments with receipts or invoices but instead uses a standardized fixed-amount calculation.

Taking a 2026 death case as an example, if family members actually paid NT$300,000 for funeral arrangements, they can still claim a NT$1.38 million funeral expense deduction when filing the deceased’s inheritance tax. Similarly, if higher expenses for memorial services, funeral providers, or columbarium placements result in actual spending of NT$2 million, the funeral expense deduction remains at NT$1.38 million and will not be increased to NT$2 million.

Why can you deduct NT$1.38 million even if you only spent NT$300,000?

According to Article 17 of the Inheritance and Gift Tax Act, funeral expenses for the deceased may be deducted from the inheritance tax base. Article 12-1 further stipulates that certain tax-free amounts and deductions—including funeral expenses—are adjusted based on changes in the Consumer Price Index (CPI) when conditions are met. The Ministry of Finance has announced that for inheritance cases occurring in 2026, the funeral expense deduction will remain at NT$1.38 million. Thus, the “NT$1.38 million” figure is a statutory deduction used in inheritance tax calculations, not an assumption that every household actually spent exactly NT$1.38 million on funerals. Because a fixed deduction system is used, situations arise where “only NT$300,000 was spent, yet NT$1.38 million is deducted” or “NT$2 million was spent, but only NT$1.38 million is deducted.”

Deducting NT$1.38 million in funeral expenses does not mean paying NT$1.38 million less in inheritance tax

Another common misconception is interpreting the “deduction of NT$1.38 million” as directly reducing the inheritance tax liability by NT$1.38 million. In reality, the funeral expense deduction is subtracted from the total estate value to calculate the “taxable net estate,” not directly deducted from the final tax amount. The basic inheritance tax calculation is: “Total Estate Value – Tax-Free Amount – Various Deductions = Taxable Net Estate,” after which the applicable tax rate is applied based on the resulting taxable net estate bracket.

According to Ministry of Finance data, for cases where death occurs in 2026, each inheritance tax case has a tax-free threshold of NT$13.33 million, while the NT$1.38 million funeral expense deduction is a separate allowable deduction. For example, assuming the taxable net estate falls within the 10% tax bracket, a NT$1.38 million deduction reduces the tax base by that amount; if there is no change in tax brackets before and after the deduction, the corresponding tax difference would be approximately NT$138,000—not a direct reduction of NT$1.38 million. The actual tax savings depend on the total estate value, tax-free amount, other deductions, and the final applicable inheritance tax bracket.

What is the 2026 inheritance tax funeral expense deduction amount?

According to the Ministry of Finance’s announced amounts applicable for 2026, for cases where the date of death (inheritance commencement date) falls between January 1 and December 31, 2026, the tax-free amount per inheritance tax case is NT$13.33 million. Other deductions include: spouse (NT$5.53 million), each direct descendant (NT$560,000), each parent (NT$1.38 million), and funeral expenses (NT$1.38 million). The current inheritance tax brackets are: 10% for taxable net estates up to NT$56.21 million; 15% for amounts exceeding NT$56.21 million up to NT$112.42 million; and 20% for amounts exceeding NT$112.42 million. Therefore, although the funeral expense deduction is fixed at NT$1.38 million, the actual impact on tax liability varies depending on the overall taxable net estate and applicable tax bracket.

Is it necessary to attach invoices or receipts for the NT$1.38 million funeral expense deduction?

According to the Ministry of Finance, the funeral expense deduction is calculated using a fixed amount, and general cases do not require submission of proof of expenditure. Therefore, it is not necessary to collect NT$1.38 million worth of invoices from funeral service providers, columbarium fees, or other funeral-related receipts to claim the deduction. However, different rules apply if the deceased was a ROC national habitually residing outside Taiwan or a non-ROC national—funeral expenses are only deductible if incurred within Taiwan. Therefore, even if a family spent only NT$300,000 on a funeral, it does not mean the funeral expense deduction is limited to NT$300,000 when filing inheritance tax. Under 2026 regulations, general cases use the fixed amount of NT$1.38 million. Likewise, even if actual spending exceeds NT$1.38 million, the deduction does not increase due to higher expenditures.

References: Ministry of Finance Tax Portal: "How Much Can Be Deducted for Funeral Expenses from the Estate Total?" Ministry of Finance: "Applicable Tax-Free and Deduction Amounts for Inheritance Tax in Minguo Year 115" Ministry of Finance: "Announcement of Tax-Free Amounts, Non-Taxable Amounts, Deductions, and Tax Brackets for Inheritance and Gift Tax Cases Occurring in Minguo Year 115" Inheritance and Gift Tax Act Articles 12-1 and 17

This article is for general informational purposes only. Actual inheritance tax filing and application of deductions should follow the latest announcements from the Ministry of Finance and local National Tax Bureaus, as well as individual case determinations. For special circumstances, overseas assets, or other tax-related questions, please consult the National Tax Bureau or a professional tax advisor.