Key summary
Separate income deductions from tax credits, check pension and rent conditions, and understand why a credit is not a guaranteed refund.
Year-end settlement reconciles a wage earner's annual tax with tax already withheld. A tax credit is not a guaranteed cash payment, and an income deduction is not a tax credit. This is an overview of selected current rules reviewed on 9 September 2026, not a completed return.
Start with your tax status and income year
Employers normally settle the previous calendar year's employment income early in the following year. A settlement during early 2026 concerns 2025 income. Confirm the applicable year, Korean tax residence and any flat-tax election first. Non-resident restrictions and the foreign-worker flat election can remove deductions available in the ordinary resident method.
Income deductions reduce the tax base
- The basic personal deduction is KRW 1.5 million for the taxpayer. Additional family members have relationship, income and sometimes age requirements; the same person cannot be claimed twice.
- Eligible national pension and employee insurance payments are deductions. Private pension savings and IRP contributions belong to a different, tax-credit category.
- The card-spending deduction generally begins after eligible spending exceeds 25% of gross salary. Rates, category caps and eligible family spending vary. Do not route all spending to a higher-paid spouse without comparing thresholds and eligibility.
Selected tax credits: rate is not refund
| Category | Main rule | Important limit |
|---|---|---|
| Pension savings / IRP | National credit: 15% for gross salary up to KRW 55 million, otherwise 12%; other-income conditions also apply | KRW 6 million pension-savings limit; KRW 9 million combined with eligible retirement-account payments |
| Medical expenses | Generally 15% on qualifying costs above 3% of gross salary | Reimbursements, recipient caps and special-category rates require separate checks |
| Education | 15% of qualifying expenses | Eligible institutions, recipients and caps differ |
| Ordinary qualifying donations | 15%; 30% on the portion above KRW 10 million | Donation type, limits and carry-forward rules matter |
| Monthly rent | 15% or 17% of qualifying rent, up to KRW 10 million a year | Housing, residence registration, home-ownership and income conditions apply |
For rent, the gross-salary ceiling is KRW 80 million, with the 17% rate applying up to KRW 55 million; comprehensive-income conditions also apply. Confirm the complete eligibility rules before claiming. The pension figures often quoted as 13.2% or 16.5% include the associated local-tax effect; they are not the national credit rates and are not an investment-return guarantee.
A practical settlement checklist
- Collect your withholding statement and confirm the tax year.
- Check Hometax records against actual payments and reimbursements.
- Agree which spouse may claim each eligible dependent; avoid duplicate claims.
- Separate income deductions from tax credits and apply the tax calculation in that order.
- Compare final tax with tax already withheld. A smaller tax bill can mean a smaller additional payment, not necessarily a refund.
Do not buy unnecessary services or lock up emergency cash in a pension product just to obtain a credit. Product withdrawal rules, fees and investment loss are separate from tax treatment.
Sources and tools
- NTS other tax credits: pension accounts (Korean)
- NTS special tax credits: medical, education and donations (Korean)
- National Assembly Budget Office, 2026 Taxation in Korea (Korean PDF) — monthly-rent conditions.
- Korean take-home salary estimate in English ? a simplified model, not a refund calculator.
- Year-end estimator (Korean)
- English comparison model and its omissions
Sources and method
Use the dated sources and assumptions stated in this guide. An illustration is not an employer promise, tax assessment or investment forecast. Personal eligibility and the applicable income year need separate checks.
Methods, official resources and help →Use this guide
Explore the limited resident comparison and its omissions. It does not calculate a final refund or decide eligibility.
Compare income-tax methods →Share this guide
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