Taiwan to splash out on NATO-style defense budget in 2026

Taiwan will adopt a broader NATO-style defense budget model as planned 2026 spending surpasses 3% of GDP.

On August 21, Taiwan's Executive Yuan, the government's executive branch, approved Taiwan’s central government budget for the fiscal year 2026, which includes a defense budget of NT$949.5 billion (US$31.3 billion), equivalent to 3.32% of GDP—a historic high. This marks the first time since 2008 that Taiwan’s defense spending has surpassed the 3% GDP threshold.

President Lai Ching-te (賴清德) emphasized Taiwan’s long-term security commitment by announcing, during an August visit to Navy personnel, that the defense budget is expected to reach 5% of GDP by 2030.

Taiwan adopts NATO model as defense budget sees sharp rise

For the first time, Taiwan adopted the “NATO model” for calculating defense expenditure in the 2026 budget.

This new approach includes not only the Ministry of National Defense’s (MND) routine budget but also Coast Guard outlays and veterans’ retirement pensions. The adoption of this broader definition significantly contributed to the dramatic increase in the reported defense budget.

US pressure on Taiwan to increase its defense budget may have influenced this outcome. During his 2024 presidential campaign, Donald Trump publicly urged Taiwan to raise its defense spending to 10% of its GDP.

Some see this target as unrealistic for Taiwan. Former American Institute in Taiwan (AIT) Director William Brent Christensen previously called the idea of a 10% GDP defense budget “unrealistic” at a Global Taiwan Institute conference in Washington, D.C. on April 9, 2025.

Nevertheless, Taipei responded to US concerns by crafting a gradual increase plan, demonstrating goodwill through its significantly expanded 2026 defense allocation.

In terms of the MND’s regular budget, the 2026 allocation for routine expenditures stands at NT$561.4 billion, up from NT$467.6 billion in 2025—a year-on-year increase of approximately 20%. This upward trend underscores Taiwan’s growing commitment to strengthening its defense posture in the face of rising geopolitical threats.

Over the past decade, Taiwan has steadily increased its defense budget. When President Tsai Ing-wen (蔡英文) first took office in 2016, the Ministry of National Defense's routine budget stood at NT$320 billion.

After eight years, the defense budget had expanded by over NT$100 billion by 2024—an increase of approximately 38%. This figure does not include two special budgets.

Bipartisan consensus emerges in Taiwan over increased defense spending

Starting from September, Taiwan’s legislature prepares to enter the second half of the 2025 session, focused on budget deliberations.

On August 25, the AIT posted a message on Facebook stating that AIT Director Raymond Greene met with Kuomintang (KMT) legislators to discuss U.S.-Taiwan defense cooperation. The post emphasized that AIT “welcomes a continued strong commitment from all parties to enhancing Taiwan’s defense reforms and expenditures.”


US Senators Roger Wicker, chair of the Senate Armed Services Committee, and fellow committee member Deb Fischer visited Taiwan at the end of August this year. During their meeting with Legislative Yuan Speaker Han Kuo-yu (韓國瑜), Han said that while Taiwan’s three major political parties may hold differing views on national defense and foreign affairs, a cross-party consensus has gradually formed after a year and a half of coordination.

Han emphasized that the legislature will fully support foreign affairs and national defense initiatives, work to deepen the Taiwan-U.S. partnership, and back efforts to increase Taiwan’s defense spending to more than 3% of GDP next year. Ultimately, Taiwan aims to align with NATO’s 5% defense spending benchmark.

New defense budget adds resilience, but operational gaps remain

At a seminar hosted by the Hudson Institute on September 4, Admiral (Ret.) Richard Y. K. Chen (陳永康), former Chief of Naval Operations and current legislator, said Taiwan’s upcoming defense budget includes several new priorities, such as infrastructure protection and what he called "coherent societal resiliency." He added that the budget will fund not only missile platforms and other hardware, but also cyber defense measures, including upgrades to the power grid.


In an interview with NOWNEWS, Dr. Chieh Chung (揭仲) of the Institute for National Defense and Security Research (INDSR) raised concerns over the structure of Taiwan’s 2026 defense budget. He said that while the overall allocation for weapons procurement and research and development (R&D) has seen a significant increase, funding for core operational areas—including personnel training, fuel procurement, and equipment maintenance—has remained at traditional levels.

Chieh added that this imbalance is cause for concern. According to his analysis, the projected ratio between spending on weapons acquisition and operations & maintenance (O&M) will reach 1.75:1 in 2026

With Taiwan’s 2026 defense budget projected to exceed 3% of GDP, current political consensus and public sentiment suggest it is likely to pass smoothly through bipartisan negotiations. However, despite the significant increase in funding, whether the military can effectively utilize these resources to build the expected combat capabilities remains a key challenge.