Last week, when Taiwan’s government announced the 2027 defense budget, the headline was an 18% increase in spending.
That will bring Taiwan’s military spending to 1.123 trillion New Taiwan dollars (approximately $35.3 billion), as long as the opposition-controlled legislature approves it.
But those are just the numbers at the very top of the page. The government’s announcement includes a lot more detail, and some of it is rather interesting.
The budget for the Ministry of National Defense is only one portion of military spending. The ministry’s budget is increasing by 23.2%.
This Defense Ministry’s budget is divided into three sections: military investment, which includes some acquisitions, operations; and personnel. Personnel is increasing by only 3.6%, and operations by 12.9%.
Military investment is increasing by a whopping 60.3%, far outstripping the growth of the budget as a whole. Indeed, much of the total increase from last year can be found in this line item.
While Taiwan buying more weapons is generally seen as welcome, there is risk attached. Chieh Chung (揭仲), a fellow at the Institute for National Defense and Security Research think tank in Taipei, pointed out last year that Taiwan risked “structural imbalances” in its military budget. If spending on new equipment exceeds maintenance and salary costs, then you can end up with weapons that don’t work and no one to operate them.
The proportionally small increase in personnel budget is also intriguing. Taiwan finally turned around the decline in the number of serving military personnel, with a modest increase of 5,000 over the 12 months to June this year. The Defense Ministry credited that increase in part to higher pay.
Last year, the opposition-controlled legislature passed a law to increase a monthly stipend given to military personnel on top of their salary. The increase to NTD 30,000 is significantly more than the previous NTD 13,000 to NTD 15,000. Taiwan’s premier, Cho Jung-tai (卓榮泰), said at the time that the law violated the provisions of the Budget Act and the spirit of the constitution, according to the Liberty Times. But President Lai Ching-te (賴清德) ultimately signed the law.
The Defense Ministry estimated the increase to the stipend would cost NTD 30 billion. When Defense Minister Wellington Koo (顧立雄) was asked about its implementation in November, he declined to give a clear answer.
The increase in personnel budget could potentially accommodate the NTD 30 billion cost. When reached for comment, a Defense Ministry spokesperson said they could not provide further information until the budget was confirmed.
Taiwan uses special budgets to fund expenditure outside of the regular budget. Special budgets typically run over several years, and are still amortized annually, appearing as a distinct line item. For 2027, the combined total of special budget spending is NTD 238.8 billion, an increase of 27.8% over this year’s NTD 186.8 billion.
Taiwan’s legislature finally passed a new special defense budget in May to fund purchases of new weapons from the U.S. The amount was NTD 780 billion, substantially less than the NTD 1.25 trillion President Lai had proposed last year, which included funding for domestic drone production.
It’s not clear from the proposed budget released by the government how much, if any, of this NTD 780 billion will be spent next year.
There is also a literal asterisk next to the relevant special budget line item that says planned spending includes special defense budgets “pending approval or review by the Legislative Yuan,” and “for the procurement of autonomous unmanned vehicles for defense.”
Yesterday the legislature passed a drone procurement bill, but the funding has been placed under the Ministry of Economic Affairs and is not a special budget. It’s thus at least possible that some of the programmed special budget defense spending won’t be funded.
One interesting tidbit from this section: Taiwan appears to have finally paid off the 66 F-16 fighter jets that it bought from the U.S. in 2019. The first of these are reportedly arriving very soon.
Spending on the coast guard was folded into the dense budget last year, in line with NATO practice. The annual budget for the coast guard is actually slightly down, from NTD 29.5 billion to NTD 27.3 billion. But special budget spending on the coast guard is dramatically up, from NTD 7.6 billion to NTD 20.6 billion.
Nikkei Asia reported that the Ocean Affairs Council has pledged to spend NTD 60 billion improving the coast guard, including fleet upgrades, adopting drone patrols and embedding artificial intelligence analysis for a more complete maritime surveillance system.
The spending on veterans, which was also added to the defense budget last year, is down from NTD 106.4 billion to NTD 103.8 billion.
The number of veterans in Taiwan is decreasing. The Veterans Affairs Council reports that in July this year there were 299,264, whereas in July 2025 there were 306,340. This is a stark drop from a decade ago; in 2016 there were more than 388,000 veterans.
Reporting for this article was informed by data provided by Legislator Chen Yeong-kang’s (陳永康) office. Those data are in agreement with figures published by Taiwan’s Executive Yuan.
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