Guides to Korea's earned income tax credit usually run to two lines: ceilings of 22m won / 32m won / 44m won, and maximums of 1.65m won / 2.85m won / 3.3m won. To use either line you first have to settle two things — which household you are, and which income is being counted. Both are set out plainly in the statute, and both get blurred in the summaries.
1. "Both spouses working" is not the test. The statute asks for 3m won or more from each — a spouse who earned 2.5m won leaves you a one-earner household.
2. The same figures do two different jobs. 22m won / 32m won / 44m won are ceilings on annual total income; the amount is set by earnings counted. Different income goes into each.
3. Business income enters after a haircut. The sector rate runs from 20% to 90% — the same turnover counts as 20% for a wholesaler and 90% for personal work.
Three household types, decided by the spouse's earnings
Article 100-3(5) of the Act puts it this way.
| Household | The statutory test |
|---|---|
| Single | No spouse, no dependent child, and no qualifying parent as below |
| One earner | A spouse whose earnings counted are below 3m won or no spouse but a dependent child or no spouse but a parent aged 70 or over |
| Two earners | Earnings counted of 3m won or more from each spouse |
| Act art. 100-3(5). A qualifying parent must meet all of: annual income of 1m won or less, living with you, and aged 70 or over. Parents of a deceased former spouse, and the new spouse of a remarried parent, also count. | |
Remembering it as "one works / both work" goes wrong whenever the spouse earns a little. Below 3m won of earnings counted, both working still makes it a one-earner household.
And the classification moves real money. One earner has the lower maximum — 2.85m won against 3.3m won — but pays more over the lower part of the range, because it reaches its maximum at 7m won where two earners take until 8m won.
Annual total income and earnings counted
The names are close and the threshold figures identical, but the contents are not.
| Annual total income | Earnings counted | |
|---|---|---|
| What it decides | Eligibility — over it, nothing | The amount — the table's horizontal axis |
| What goes in | interest · dividends · business × sector rate · employment · pension · other income · religious workers' | business × sector rate · employment · religious workers' |
| Source | Decree art. 100-3(1) | Act art. 100-3(5)3 |
| In annual total income each component is floored at zero if negative, and tax-exempt income is excluded (Decree art. 100-3(1)). | ||
Which means interest, dividends, pension and other income cut eligibility but never raise the amount. A household with little employment income and substantial investment income runs into exactly this — almost nothing on the amount axis, yet over the ceiling on the eligibility one.
Business income is cut by sector
Business income does not enter as it stands. It enters after its sector rate (Decree art. 100-3(1)4). On turnover of 10m won, a wholesaler counts 2m won and personal work counts 9m won.
| Rate | Sector |
|---|---|
| 20% | wholesale |
| 25% | agriculture, forestry and fishing; retail |
| 30% | mining; motor vehicle and parts sales; anything not listed elsewhere |
| 40% | manufacturing; restaurants (not bars); property dealing |
| 45% | electricity, gas, steam and water; construction (not non-residential building) |
| 55% | bars; lodging; sewage and waste; transport; publishing, broadcasting and communications |
| 60% | commodity brokerage; computer and information services; insurance and pensions |
| 70% | finance; arts, sport and recreation; repair and personal services (not personal work) |
| 75% | property services; professional, scientific and technical; business support; education; health and social work |
| 90% | property letting; rental other than property; personal work; domestic employment |
| Decree art. 100-3(1)4. With more than one line of business, each is multiplied and the results added. | |
Freelance personal work sits at the top, 90%. If your income is the kind that arrives with 3.3% withheld, almost all of it counts — worth reading alongside the 3.3% withholding.
Questions that tend to remain
How old can a dependent child be?
Under 18, with annual income of 1m won or less (Act art. 100-4). No age limit for a child with a disability. And there is a proviso: "a child who is under 18 on any day during the tax period is treated as under 18". Turning 18 during the year leaves the year intact.
What if the child lives elsewhere?
The dependent-child test asks for living together on the resident register, "except in the case of a lineal descendant". Your own child may live elsewhere. Where a grandchild or sibling is being counted instead, the living-together requirement does apply.
No spouse, but a parent at home?
A parent aged 70 or over, with annual income of 1m won or less, living with you, makes it a one-earner household. Parents of a deceased former spouse and the new spouse of a remarried parent count too. The "70" is the part most often dropped.
How much interest or dividend income is too much?
There is no separate line — it is the point where everything added together reaches the ceiling, 22m won for a single household. If investment income is substantial, the financial income threshold is the neighbouring question.
How are assets measured?
Land, buildings, vehicles, deposits and the like held by household members (Act art. 100-3(1)4). 170m won or more halves the benefit; 240m won or more ends eligibility — two thresholds. Debt is not netted off.
Sources
Restriction of Special Taxation Act, in force 1 January 2026 (Act 21223) — art. 100-3(1) (income ceilings and assets), art. 100-3(5) (household types and the definition of earnings counted), art. 100-4 (dependent children), art. 100-5(4) (asset reduction).
Enforcement Decree, in force 1 July 2026 (Presidential Decree 36423) — art. 100-3(1) (the scope of annual total income and the ten sector rates).
Read directly on the national statute portal. The ceiling table sits in the provision as an image and was checked separately.
Where to check
Hometax. Household type is determined from the records the tax office holds.
The tax helpline, 126. Fastest route when the classification is unclear.
The calculator puts a figure on it; formula versus table explains where that figure comes from. The overview and the child credit are in the main guide, business filing in global income tax, and side work in the side-income guide.
