Korea's comprehensive income tax does what its name says: it adds several kinds of income together and taxes the total. Understanding it is therefore less about memorising a rate table than about knowing where the combining stops — which income joins the pile and which is finished the moment it is withheld.
1. What you pay. Eight brackets apply to your tax base — but you never split it bracket by bracket. It is one line: base × rate − the progressive deduction (for example, 15% less ₩1.26 million up to ₩50 million).
2. What actually matters. Not the rate table but where the combining stops — which income joins the pile and which is finished the moment it is withheld. The ₩15 million private pension line is where that turns.
3. What to do. Reducing the tax base (income deductions) and reducing the tax itself (tax credits) are different things. And the NTS publishes its own list of “over-claimed deductions” — read that before filing, because these get clawed back.
Two items in the 3 August 2026 bill overlap with this article. (1) The dependant income test rises from ₩1m to ₩3m (or ₩5m to ₩7.5m of total pay), and (2) for pre-school children, tuition at academies other than arts academies (music, art, dance) and sports facilities would no longer qualify for the education credit. Still a government bill, with no start date in the release — everything below is current law. See our guide to the 2026 tax reform bill.
The rate table and deduction formulas are copied from National Tax Service originals, and we re-ran the NTS's own worked example in code to check the tax comes out to the won (see §4).
Basis. The rate table and formulas are for income year 2025 (filed May 2026). The tax credits come from the NTS 2025 Year-End Settlement Filing Guide for Withholding Agents — that document covers employment income, so how far it extends to the purely self-employed is flagged in §9.
The rate table — eight bands, and the shortcut called progressive deduction
Tax applies to your tax base (income after deductions), at the rates below. This is the NTS base rate table as printed.
| Tax base | Rate | Progressive deduction |
|---|---|---|
| ≤ 14M won | 6% | — |
| ≤ 50M won | 15% | 1,260,000 |
| ≤ 88M won | 24% | 5,760,000 |
| ≤ 150M won | 35% | 15,440,000 |
| ≤ 300M won | 38% | 19,940,000 |
| ≤ 500M won | 40% | 25,940,000 |
| ≤ 1B won | 42% | 35,940,000 |
| Over 1B won | 45% | 65,940,000 |
The formula is tax base × rate − progressive deduction. This is where the most common misreading starts: a tax base of 60 million won is not taxed at 24% throughout. Each rate applies only to the slice above its threshold, and the progressive deduction is simply a shortcut that collapses that staircase into one line.
We computed it both ways to check.
| Tax base | Shortcut formula | Band by band | Marginal | Effective |
|---|---|---|---|---|
| 30M won | 3.24M won | 3.24M won | 15% | 10.8% |
| 60M won | 8.64M won | 8.64M won | 24% | 14.4% |
| 100M won | 19.56M won | 19.56M won | 35% | 19.6% |
| 200M won | 56.06M won | 56.06M won | 38% | 28.0% |
| 700M won | 258.06M won | 258.06M won | 42% | 36.9% |
The two methods agree exactly at every level. And the effective rate is always the lower one — someone with a 100 million won tax base has a 35% marginal rate but pays 19.6% of that base in tax. Crossing into a higher band never leaves you worse off under this structure.
Local income tax is charged on top, commonly stated as 10% of the income tax. NTS rates and Financial Supervisory Service rates sit at exactly a 1.1× ratio, which is consistent with that. But no public document we could reach actually writes “10%” (§10).
What gets combined, and what is finished on its own
This is the substance of the tax. Two things both called “income” can be treated completely differently. What changes once interest and dividends pass the ₩20m line is set out in the financial income guide.
| Income | Combined? | Boundary |
|---|---|---|
| Business (freelance, self-employed) | Yes | Any amount |
| Employment | Yes | One employer plus completed year-end settlement usually means no separate filing |
| Interest and dividends | Excess only | Separate taxation ends it at 20M won a year or less |
| Private pension (pension savings, IRP) | Conditional | 15M won a year — but see §3 |
| Public pension (National Pension etc.) | Yes | Does not count toward the private-pension 15M test |
| Rental | Yes | Separate taxation may be elected depending on homes owned and revenue |
| Other income | Conditional | Separate taxation electable below a threshold |
One salary plus a completed year-end settlement usually means nothing to file. At the other end, anyone paid with 3.3% withheld is almost certainly in scope — and that settlement is where freelancers often get money back. You can run your own numbers in the income tax calculator.
The 15 million won private-pension line — what counts and what doesn't
This boundary is misread more than any other. People drawing a National Pension worry that “the two together go over 15 million” — they are not added together. The NTS original sets out separate taxation in four items.
“Pension income other than public pension income is taxed separately where it falls under the following”
“① pension income received from deferred retirement income paid into a pension account”
“② pension income withdrawn for medical purposes, natural disaster or other unavoidable reasons from tax-credited contributions and their growth”
“③ pension income other than ① and ② totalling 15 million won or less a year”
“④ even where ③ exceeds 15 million won a year, separate taxation at 15% may be elected in the global income return”
| This money | Counts toward 15M? | Why |
|---|---|---|
| National Pension and other public pensions | No | “other than public pension income” |
| Severance-funded (deferred retirement income) | No | Item ①; ③ says “other than ① and ②” |
| Medical or unavoidable-reason withdrawals | No | Item ② |
| Tax-credited contributions plus growth | Yes | This is what ③ points at |
Item ④ matters too. Crossing 15 million does not mean the worst case is top-rate global taxation — you may elect 15% separate taxation. What does change is that the whole pension, not just the excess, leaves the low withholding rates of 3%, 4% and 5%. The withdrawal mechanics are laid out in the pension savings and IRP guide.
The pension income deduction — and the NTS example, reproduced
Pension income is not taxed as received. A pension income deduction comes off first (Income Tax Act art. 47-2, capped at 9 million won).
| Total pension | Deduction |
|---|---|
| ≤ 3.5M won | the whole amount |
| 3.5M – 7M won | 3.5M + 40% of the excess over 3.5M |
| 7M – 14M won | 4.9M + 20% of the excess over 7M |
| Over 14M won | 6.3M + 10% of the excess over 14M |
Because the rate steps down at each band, the deduction shrinks as a share of the pension — 82% of a 5 million won pension, but 34.5% of a 20 million won one. The 9 million won cap is reached at a total pension of 41 million won, and nothing above that adds to it.
The NTS guidance carries one worked example — a pension of 1 million won a month, 20 years of service. To check that the table and formulas above are right, we put the same figures through code.
| Step | Amount | How |
|---|---|---|
| Total pension | 12M won | 1M × 12 |
| Pension income deduction | 5.9M won | 4.9M + (12M − 7M) × 20% |
| Pension income | 6.1M won | 12M − 5.9M |
| Personal deduction | 3M won | self + spouse |
| Tax base | 3.1M won | 6.1M − 3M |
| Computed tax | 186,000 won | 3.1M × 6% |
The rate table and deduction bands in this article reproduce the tax office's own example to the won. Copying a table and confirming that the table actually computes are two different things. It also tells you something concrete: a retiree drawing a million won a month owes about 186,000 won a year.
Cutting the base versus cutting the tax
An income deduction reduces the tax base; a tax credit comes off the tax itself. Won for won the credit is far stronger — a 1 million won deduction saves you your rate (6–45%) of that, while a 1 million won credit saves a million. The credit whose scope confuses people most — medical and education expenses — is taken apart separately.
Personal deduction (1.5M won each)
| Who | Age test | Income test |
|---|---|---|
| You and your spouse | None | Annual income 1M won or less wage-only: gross salary 5M won or less |
| Parents and grandparents | 60 or over | |
| Children and grandchildren | 20 or under | |
| Siblings | 20 or under, or 60 or over |
A person with a disability faces no age test. Additional deductions sit on top: elderly (70+) 1M won, disability 2M won, working woman 0.5M won (aggregate income 30M won or less), single parent 1M won. Working woman and single parent cannot both be claimed; where both apply, the single-parent deduction wins. Full tests are tabulated in the dependent deduction guide.
Main tax credits
| Credit | Rate or amount | Note |
|---|---|---|
| Pension account (pension savings, IRP) | 12%; 15% below an income threshold | 6M won, or 9M won including an IRP |
| Child credit | 1 child 250k / 2 550k / 3+ 550k plus 400k per extra child | 3 children 950k · 4 children 1.35M |
| Birth or adoption | first 300k / second 500k / third onward 700k | |
| Marriage credit | 500,000 won | marriages registered 2024–2026 · once in a lifetime |
| Medical expenses | 15% / fertility treatment 30% / premature and congenital-condition infants 20% | above 3% of gross salary · 7M won cap no cap for yourself, 65+, under 6, disability, premature infants, or rare-disease registrants |
| Education | 15% | 3M won per child pre-school and K–12 / 9M won for university |
| Standard credit | 130,000 won | if you claim no other special deductions |
| Employment income credit | 55% of computed tax up to 1.3M won, 30% above | capped between 740k and 200k won |
On the deduction side there is also card spending (15–40% of the amount above 25% of gross salary, capped at 3M / 2.5M won), the Noran Umbrella mutual aid for small-business owners, and business expenses for the self-employed. The card deduction's subtraction order and exclusion list are covered in the year-end settlement guide.
The over-claims the NTS names itself
Avoiding these is worth more than finding one more deduction, because clawbacks carry penalty tax.
| # | Over-claim |
|---|---|
| ① | Claiming a dependant whose income exceeds 1 million won |
| ② | Double-claiming a dependant (siblings each listing the same parent) |
| ③ | Personal deduction for a deceased person |
| ④ | Claiming a divorced spouse |
| ⑤ | Claiming a dependant who fails the age test |
| ⑥–⑧ | Double-claimed education or medical expenses, housing-fund errors, education errors |
| ⑨ | Medical expenses reimbursed by indemnity insurance or refunded as above the out-of-pocket maximum |
| ⑩ | Errors in the SME young-worker reduction |
Items ①–⑤ cost more than the 1.5 million won. The special deductions filed under that person — insurance, education, card spending, donations — are disallowed as well. Not knowing a parent's income crossed 1 million won costs you their medical and card totals too.
When and how to file
- Window — 1–31 May. Taxpayers subject to certified filing have until 30 June.
- A weekend deadline pushes the date. For income year 2025 the 31st fell on a Sunday, so the deadline was 1 June. Read only the printed “31 May” and you lose a day.
- How — Hometax or the Sontax mobile app. A “pre-filled” notice reduces it to checking and submitting.
- Local income tax — after the national return, a “go to local income tax” button carries the figures to Wetax. People who close the browser at the first confirmation screen miss the second half.
- Missing the deadline — a 20% non-filing penalty plus late-payment penalties. And if you were owed a refund, you simply do not get it.
- Something missed in a past filing — a corrected claim can be filed within five years.
The month-by-month calendar is in the household tax calendar, and VAT for business owners in the VAT guide.
Questions this raises
I'm a freelancer taxed at 3.3%. Do I pay again?
The 3.3% is prepaid tax. You settle in May, and if the real liability is lower you get the difference back. The table above shows why: a 30 million won tax base carries an effective rate of 10.8%, above 3.3% — so more is due; pile on deductions and the base drops until a refund appears.
Am I worse off for crossing into a higher band?
No. Only the slice above the threshold takes the higher rate — which is exactly what the two matching columns above demonstrate. Earning one more won never reduces your after-tax income here.
My National Pension and my pension savings together exceed 15 million won.
They are not added. The NTS original applies this test to pension income “other than public pension income”. Severance-funded pension income is a separate item too.
Do interest and dividends always have to be filed?
At 20 million won a year or less separate taxation usually ends it; above that they join your other income. That 20 million figure, though, is one we could not re-check against a public-agency original this round (§10).
Sources
- National Tax Service — the pension income guidance and the 2025 Year-End Settlement Filing Guide for Withholding Agents. Source of the eight-band base rate table with its progressive deductions, the four-band pension income deduction and its worked example (1M won a month, 20 years of service → 186,000 won of tax), the wording of separate-taxation items ①–④, the personal and additional deduction amounts and tests, the child, birth, marriage, medical, education, standard and employment-income credit rates and caps, the card-spending deduction, and the ten over-claimed deductions.
- Seoul Labor Rights Center — posting of the NTS year-end settlement guide. Confirms this manual is the official document distributed to company payroll staff and is reissued annually.
- Seoul Metropolitan Government — notice on filing local and comprehensive income tax (May 2026). Source of the 1 June extension for income year 2025 and of the Hometax-to-Wetax handoff.
- Seoul Metropolitan Government — how to file comprehensive income tax. Source of the six income types, the 30 June deadline for certified filers, and the 20% non-filing penalty.
- Seoul Labor Rights Center — how employees and freelancers file differently. Source of the rule that anyone paid with 3.3% withheld must file the following May.
Where to check further
- Whether these tax credits apply the same way to the self-employed. The list is taken from the employment-income year-end settlement guide, so whether medical and education credits apply on the same terms to someone with business income only could not be settled from that document. Freelancers should put their own case to Hometax or the NTS helpline (126) — the difference is material.
- What happens once interest and dividends exceed ₩20 million. The threshold is widely cited, but how the first ₩20 million is then treated could not be confirmed, so it is not covered here. The Hometax guidance on aggregate financial income sets out that structure.
- Separate-taxation boundaries for rental and other income, and 2026 amendments. These turn on home count and revenue, and rates and deductions change every year. Check Hometax's guidance for the relevant year immediately before filing.
Written as of July 2026. The rate table, deduction formulas and credit figures come from the NTS documents above, and the tax office's own worked example was recomputed and matched to the won. Individual cases still vary widely with income mix and deductions; this is general information, not tax advice. Confirm your own case on Hometax or with the tax helpline (126). Whether the tax office is holding an unclaimed refund for you takes about five minutes to check — see the refund lookup guide. The November interim bill can be worked out ahead with the interim payment calculator — it is not half of what you paid last May.
