Tax Guide 💰
한국 세금 및 연말정산 가이드
📋 Table of Contents
📊Korean Tax System Basics (한국 세금 제도)
Korea has a progressive income tax system where higher earners pay a higher percentage. All workers in Korea, including foreigners, must pay income tax.
💡 Key Points
- Tax year: January 1 - December 31
- Tax residence: If you stay in Korea 183+ days/year, you're a tax resident
- Withholding tax: Employer deducts tax from salary monthly
- Year-end settlement: Annual reconciliation in February-March
- Filing deadline: May 31 (if you need to file separately)
✅ Tax Resident (거주자)
If you live in Korea for 183+ days in a tax year:
- Taxed on worldwide income
- Lower tax rates
- More deductions available
- Year-end settlement possible
⚠️ Non-Resident (비거주자)
If you live in Korea less than 183 days:
- Taxed only on Korean income
- Flat 20% tax rate (usually)
- Limited deductions
- No year-end settlement
💸Income Tax Rates (소득세율)
Korea uses a progressive tax system with 8 tax brackets (as of 2024). The more you earn, the higher your tax rate on that portion of income.
| Annual Income (연소득) | Tax Rate | Progressive Deduction |
|---|---|---|
| Up to ₩14M | 6% | ₩0 |
| ₩14M - ₩50M | 15% | ₩1,260,000 |
| ₩50M - ₩88M | 24% | ₩5,760,000 |
| ₩88M - ₩150M | 35% | ₩15,440,000 |
| ₩150M - ₩300M | 38% | ₩19,940,000 |
| ₩300M - ₩500M | 40% | ₩25,940,000 |
| ₩500M - ₩1B | 42% | ₩35,940,000 |
| Over ₩1B | 45% | ₩65,940,000 |
📐 Example Calculation:
Annual salary: ₩40,000,000
• First ₩14M: 6% = ₩840,000
• Next ₩26M (₩14M to ₩40M): 15% = ₩3,900,000
• Total income tax: ₩4,740,000
• Add 10% local income tax: ₩474,000
• Total tax: ₩5,214,000 (13% effective rate)
⚠️ Remember: You also pay 10% local income tax(지방소득세) on top of income tax. So if your income tax is ₩1,000,000, you'll pay ₩100,000 more in local tax = ₩1,100,000 total.
📅Year-End Tax Settlement (연말정산)
What is Year-End Tax Settlement?
연말정산 (Year-End Tax Settlement) is Korea's annual tax reconciliation process. Your employer calculates your actual tax based on deductions, then either:
- Refunds you if you paid too much tax during the year, OR
- Collects more if you didn't pay enough
📆 Timeline:
January - Early February
Submit deduction documents to your employer (receipts, insurance, etc.)
February - March
Employer calculates final tax and issues settlement report
March
Refund paid with your March salary (or additional tax deducted)
✅ What You Need to Prepare
- Credit/debit card statements - Automatic from card companies
- Medical expenses - Hospital/pharmacy receipts
- Insurance premiums - Life, health insurance certificates
- Education expenses - Tuition receipts (if applicable)
- Housing savings - 청약저축 certificates
- Donations - Charity receipts
- National pension refund form - If leaving Korea permanently
💰 Typical Refund Amount:
Most workers receive a refund between ₩300,000 - ₩1,500,000, depending on:
- Your salary level
- How much you spent on deductible items
- Number of dependents
- Insurance and savings amounts
🧾Tax Deductions (세액공제)
Deductions reduce your taxable income, which means you pay less tax. Here are the main deductions available to foreign workers:
1️⃣ Standard Deductions (기본 공제)
- Basic personal deduction (본인 공제)₩1,500,000
- Spouse deduction (배우자 공제)₩1,500,000
- Per dependent (부양가족 공제)₩1,500,000 each
Note: Most foreigners only claim personal deduction unless spouse/dependents are registered in Korea.
2️⃣ Credit/Debit Card Deduction (신용카드 소득공제)
Deduct a percentage of card spending that exceeds 25% of your annual salary:
• Credit cards: 15% deduction
• Debit cards & cash receipts: 30% deduction
• Traditional markets: 40% deduction
• Public transportation: 80% deduction
Example: Annual salary ₩40M. You spent ₩15M on cards. 25% of salary = ₩10M. Excess = ₩5M. Deduction = ₩5M × 15-30% = ₩750k-1.5M
3️⃣ Other Common Deductions
🏥 Medical Expenses (의료비)
15% of expenses exceeding 3% of salary (max varies by family member)
🏠 Housing Savings (주택청약종합저축)
40% of annual deposits, up to ₩3M (= max ₩1.2M deduction)
💼 National Pension (국민연금)
100% of contributions deductible
🏥 Health Insurance (건강보험)
100% of premiums deductible
❤️ Donations (기부금)
15-30% of donations (limits apply)
📚 Education Expenses (교육비)
15% of tuition fees (university, language schools may qualify)
💻Using Hometax (홈택스 사용법)
Hometax (www.hometax.go.kr) is the National Tax Service's online portal. You can check your tax records, download documents, and file returns.
🔐 How to Register for Hometax
Visit www.hometax.go.kr
Click "English" at top-right for English version
Register account
Need: ARC number, Korean phone number, email
Identity verification
Use mobile phone authentication or visit tax office
Login and access services
Now you can view tax records and download documents
✅ What You Can Do on Hometax:
- Download year-end tax settlement report (원천징수영수증)
- Check tax payment history
- Download proof of income (소득금액증명원)
- File income tax return (if required)
- Check refund status
- Print tax documents for visa applications
- View card spending data for deductions
⚠️ Common Issues:
- English version limited: Some features only in Korean
- Requires ActiveX (Windows): Use Internet Explorer or Edge (IE mode) on Windows
- Mac users: Very difficult - consider visiting tax office instead
- Mobile app: "손택스" app available but Korean only
🌍Special Rules for Foreigners (외국인 특례)
💡 20% Flat Tax Option for Certain Professionals
Some highly-skilled foreign workers can choose a simplified 20% flat tax rate for 5 years instead of progressive tax rates.
Who qualifies:
- Engineers, researchers, specialists (E-1 to E-7 visas)
- Professors at universities
- Employees at foreign-invested companies
- Must earn minimum salary threshold (varies by field)
Note: This option is often beneficial for high earners but may not be better for everyone. Consult a tax professional.
🌐 Tax Treaty Benefits
Korea has tax treaties with 90+ countries to prevent double taxation. Benefits vary by country but may include:
- Exemption for teachers/researchers for 2-3 years
- Reduced tax rates for certain income types
- Foreign tax credit for tax paid in home country
- Treaty-based return of exit tax (if applicable)
Check if your country has a tax treaty with Korea on the NTS website.
💰 National Pension Lump-Sum Refund
When leaving Korea permanently, you can get your National Pension contributions refunded:
Who qualifies:
- Leaving Korea permanently
- Not eligible for pension (less than 10 years contribution)
- Your country has social security agreement with Korea
How much:
Total contributions + interest (around 4-5% annually)
Tax:
20-22% tax withheld, but may be reduced/refunded based on tax treaty
💵Getting Tax Refunds (세금 환급)
✅ Through Year-End Settlement (Most Common)
If you work for a company, they handle year-end settlement for you:
- Submit deduction documents to employer in January
- Employer calculates final tax in February
- Refund paid with March salary (or deducted if you owe more)
📝 Filing Tax Return Yourself (필요한 경우만)
You need to file your own tax return if:
- You have multiple employers in one year
- You left Korea mid-year
- Your employer didn't do year-end settlement
- You're self-employed or freelancer
- You have income from abroad
Filing deadline:
May 1-31 for previous year's income
File online via Hometax or visit local tax office
💳 How Refunds Are Paid:
- Through employer: Added to March salary
- Direct from NTS: Bank transfer (2-4 weeks after filing)
- Check refund status: Hometax or call 126 (tax office)
💡Important Tips (중요한 팁)
📊 Track Your Spending
Use cash receipts (현금영수증) for all purchases to maximize card deductions. Register your phone number at stores or scan QR codes for automatic tracking.
💳 Use Debit Cards
Debit cards give 30% deduction vs 15% for credit cards. Use debit for everyday purchases to maximize refunds.
🏥 Keep Medical Receipts
Save all hospital and pharmacy receipts. Medical expenses can significantly increase your refund, especially for families.
⏰ Submit Documents Early
Give your employer all deduction documents by mid-January. Late submissions may not be processed, costing you refund money.
📱 Use Mobile App
Download "손택스" app (Korean only) for quick tax checks on mobile. Easier than Hometax website for basic functions.
🚨 Don't Ignore Tax Office Mail
If you receive mail from tax office (국세청), open it immediately. Could be audit notice or refund information. Get it translated if needed.
📞 Need Help? Contact:
• National Tax Service Call Center: 126 (Korean), 1588-0560 (English)
• Hometax Help: www.hometax.go.kr → Customer Service
• Visit: Your local tax office (세무서) - bring ARC and translator if needed
• Tax Accountant: Consider hiring 세무사 for complex cases (₩100-300k)
🗣️Useful Korean Phrases (유용한 한국어 표현)
Tax refund
세금 환급 (segeum hwanggeup)
Year-end tax settlement
연말정산 (yeonmaljeongsan)
Income tax
소득세 (sodeukse)
Proof of income
소득금액증명원 (sodeukgeumaekjeungmyeongwon)
Tax deduction
세액공제 (seaekgongje)
Tax office
세무서 (semuseo)
Maximize Your Tax Refund!
Keep good records and claim all eligible deductions