Tax Guide
Knowledge base on the Korean tax system and tax-saving strategies (as of 2024-2025) for reference in family financial counseling.
Overall Structure of the Korean Tax System
| Tax Classification |
Major Tax Items |
Taxation Timing |
| Income-related |
Earned income tax, business income tax, financial income tax, pension income tax |
When income is generated |
| Real estate-related |
Acquisition tax, property tax, comprehensive real estate holding tax, capital gains tax |
At acquisition/holding/transfer |
| Asset transfer-related |
Gift tax, inheritance tax |
When gift/inheritance occurs |
| Consumption-related |
Value-added tax, individual consumption tax |
At consumption |
Income Tax Summary
Comprehensive Income Tax Rates (2024-2025)
| Tax base |
Tax rate |
Progressive deduction |
| KRW 14 million or less |
6% |
- |
| Over KRW 14 million to KRW 50 million |
15% |
KRW 1.26 million |
| Over KRW 50 million to KRW 88 million |
24% |
KRW 5.76 million |
| Over KRW 88 million to KRW 150 million |
35% |
KRW 15.44 million |
| Over KRW 150 million to KRW 300 million |
38% |
KRW 19.94 million |
| Over KRW 300 million to KRW 500 million |
40% |
KRW 25.94 million |
| Over KRW 500 million to KRW 1 billion |
42% |
KRW 35.94 million |
| Over KRW 1 billion |
45% |
KRW 65.94 million |
Additional 10% local income tax levied (effective tax rate = income tax x 1.1)
Major Income Deductions/Tax Credits
| Category |
Item |
Limit/Credit Rate |
| Income deduction |
Personal deduction (self/spouse/dependents) |
KRW 1.5 million per person |
| Income deduction |
National Pension |
Fully deductible |
| Income deduction |
Credit cards, etc. |
Amount exceeding 25% of total salary (limit KRW 2-3 million) |
| Tax credit |
Pension savings/IRP |
Up to KRW 7 million x 13.2-16.5% |
| Tax credit |
Insurance premiums |
Annual limit KRW 1 million x 12% |
| Tax credit |
Medical expenses |
Amount exceeding 3% of total salary x 15% |
| Tax credit |
Education expenses |
Self fully, children annual KRW 3 million x 15% |
| Tax credit |
Donations |
Limit by type x 15-30% |
| Tax credit |
Monthly rent |
Annual limit KRW 7.5 million x 15-17% |
Taxation of Financial Income
| Category |
Taxation method |
Tax rate |
| Interest/dividends KRW 20 million or less |
Separate taxation |
15.4% (Income tax 14% + Local tax 1.4%) |
| Interest/dividends exceeding 20 million won |
Comprehensive taxation of financial income |
Combined with basic tax rate (up to 49.5%) |
| Domestic stock trading gains |
Tax-exempt (excluding major shareholders) |
- |
| Overseas stock trading gains |
Capital gains tax |
22% (after 2.5 million won deduction) |
Real estate tax summary
| Stage |
Tax item |
Summary |
| Acquisition |
Acquisition tax |
1~12% depending on housing value/number of homes owned |
| Holding |
Property tax |
0.1~0.4% based on officially assessed price |
| Holding |
Comprehensive real estate holding tax |
0.5~5% on the amount exceeding the combined officially assessed price threshold |
| Transfer |
Capital gains tax |
6~75% depending on holding period/number of homes |
Gift/inheritance tax summary
Gift tax exemption limit (aggregated over 10 years)
| Relationship |
Exemption limit |
| Spouse |
600 million won |
| Adult children |
50 million won |
| Minor children |
20 million won |
| Other relatives |
10 million won |
Inheritance/gift tax rates
| Tax base |
Tax rate |
Progressive deduction |
| 100 million won or less |
10% |
- |
| 100 million~500 million won |
20% |
10 million won |
| 500 million~1 billion won |
30% |
60 million won |
| 1 billion~3 billion won |
40% |
160 million won |
| Over 3 billion won |
50% |
460 million won |
Key tax-saving strategy summary
| Area |
Strategy |
Effect |
| Year-end tax settlement |
Pension savings + IRP 7 million won |
Up to 1.155 million won in tax savings |
| Year-end tax settlement |
Adjust credit card/debit card ratio |
Maximize income deductions |
| Financial income |
Family diversification, use of ISA |
Avoid comprehensive taxation |
| Real estate |
Long-term holding special deduction, one household one home |
Capital gains tax exemption/reduction |
| Gift |
Advance gifting (in 10-year units) |
Utilize gift tax exemption limit |
| Inheritance |
Spousal inheritance deduction (up to 3 billion won) |
Reduce inheritance tax burden |
See details
