“Interest and dividends above 20m won get taxed as global income” is true as far as it goes. What usually gets left off is the rest. Only the excess is aggregated, and if the figure that produces is smaller than the withholding calculation, you pay the withholding one instead. Which means there is a band where crossing the threshold costs nothing at all.
1. Two conditions, not one. Article 14(3)6 excludes income only where it is “20m won or less and withheld under article 127”. Below the threshold but not withheld is not separate taxation.
2. Above the line, only the excess aggregates. Article 62 taxes the first 20m at 14 per cent on its own and adds only what is over to other income at the basic rates.
3. Then it takes the larger. The article sets out two calculations and says to use the greater amount — on our arithmetic, with no other income, the withholding side stays larger up to 77.61m won, so nothing changes.
“20m or less” is not enough on its own
Income Tax Act, article 14 (calculation of the tax base) (3) The following shall not be aggregated in calculating the global income tax base. <Amended … 31 Dec 2023>
…
6. Interest income and dividend income other than those under items 3 to 5 (…), the total of which is 20m won (hereafter the “threshold amount for aggregate taxation of interest income etc.”) or less and which has been withheld under article 127
The clause reads “or less and withheld”. Both have to hold. Interest or dividends that were never withheld do not fall under this item however small they are — that is what the structure says.
And 20m won is a threshold, not a rate. Crossing it does not put a higher rate on everything; it changes how the tax is calculated.
Not every rate here is 14 per cent
The rates article 62 reaches for live in article 129, and interest and dividends are not all taxed alike.
| Type | Rate | Provision |
|---|---|---|
| Other interest income (deposits, bonds) | 14% | art. 129(1)1(d) |
| Other dividend income | 14% | art. 129(1)2(b) |
| Non-business loan interest (private lending) | 25% | art. 129(1)1(b) |
| └ but via a registered P2P lending operator | 14% | same item, proviso |
| Joint-business investor dividends | 25% | art. 129(1)2(a) |
| Income whose real name is not verified | 45% | art. 129(2)2 |
Interest on private lending is taxed at 25 per cent, not the same as a bank deposit. But the proviso pulls it back to 14 per cent when it comes through an operator registered under the online investment-linked finance law. Same “interest”, and the route it took decides the rate.
The 45 per cent for unverified names also carries a proviso — where article 5 of the Real Name Financial Transactions Act applies, the rate in that article governs. We did not verify the rate in that article.
The widely quoted 15.4 per cent is not in the statute. It is the 14 per cent of article 129 plus local income tax, and we did not check the local tax provision here. To see a maturity figure computed at 15.4 per cent, our Korean savings maturity calculator does it.
The statute calculates twice and takes the larger
Income Tax Act, article 62 (special calculation where interest income etc. is taxed as global income) Where the interest income and dividend income included in a resident’s global income tax base exceeds the threshold amount, the resident’s calculated global income tax shall be the greater of the following amounts; where it does not exceed the threshold, it shall be the amount under item 2. <Amended … 31 Dec 2018>
1. (a) The tax on the sum of the amount exceeding the threshold and other global income excluding interest and dividends
(b) The tax on the threshold amount at the rate in article 129(1)1(d)
2. (a) The tax on the interest and dividends at the rates in article 129(1)1 and 2 …
Three things are settled in that one article.
- Only the excess aggregates. Item 1(a) says “the amount exceeding the threshold” — the first 20m won is not in the aggregate at all.
- The first 20m is taxed separately at 14 per cent under item 1(b).
- And it is compared against item 2, which applies the withholding rates to the whole of the interest and dividends. The larger of the two is the tax.
With no other income, nothing changes up to 77.61m won
Computed from the article, for someone whose only global income is interest and dividends. Amounts in won.
| Income | Tax due | Rate | Item 1 · 2 |
|---|---|---|---|
| 20m | 2.8m | 14.00% | at threshold |
| 30m | 4.2m | 14.00% | 3.4m · 4.2m |
| 50m | 7.0m | 14.00% | 6.04m · 7.0m |
| 70m | 9.8m | 14.00% | 9.04m · 9.8m |
| 77.61m | 10.866m | 14.00% | flips here |
| 80m | 11.44m | 14.30% | 11.44m · 11.2m |
| 100m | 16.24m | 16.24% | 16.24m · 14.0m |
| 150m | 32.86m | 21.91% | 32.86m · 21.0m |
The effective rate does not move off 14.00 per cent until 77.61m won. The income becomes reportable, but because item 2 is the larger figure, what was already withheld simply is the tax.
The reason is that item 1(a) starts at the 6 per cent band. With no other income, the excess enters the rate table at the bottom rung, while item 2 applies 14 per cent to everything. It takes a while for the first to catch the second.
Below the threshold nothing here changes — how tax differs by asset type is in our Korean ETF tax guide, and the route that avoids it altogether is the ISA account.
A salary removes that headroom
| Other global income | Crossing point | Below it |
|---|---|---|
| none | 77.61m won | no increase |
| 5m won | 68.61m won | no increase |
| 10m won | 56.01m won | no increase |
| 13.99m won | 20.10m won | headroom of 0.1m |
| 14m won or more | 20.02m won | it costs from the first won over |
14m won is not a coincidence. It is the first boundary of the basic rate table (6 per cent up to 14m). Once other income passes that line, the excess financial income starts in the 15 per cent band and so clears 14 per cent immediately. The crossing point collapses to just above the threshold.
Put another way, this headroom belongs to people whose income is only financial. With any substantial salary or business income, the cost starts the moment you pass 20m won. The structure of the annual filing itself is in our Korean global income tax piece.
Where readers usually go wrong
Does everything get aggregated once I pass 20m?
No. Item 1(a) tells you to add only “the amount exceeding the threshold” to other income. The first 20m is handled separately at 14 per cent by item 1(b).
So can I skip filing if the tax does not change?
That is a different question. This piece covers how the tax is calculated and we did not check the filing obligation. Even in a band where the tax does not rise, the income enters the annual return once it is aggregable — check the National Tax Service for procedure.
Is health insurance also based on 20m?
Tax and health insurance run on different documents. Our earlier piece on health premiums after retirement dealt with a 10m won line for financial income — not the same number as the tax threshold. We did not check the health insurance provisions here.
Is it assessed per couple?
The article says “included in a resident’s global income tax base”, which reads as per person. But we did not check any provision addressing couples directly.
Twenty million is not the line where the rate changes. It is the line where the method changes — and the method runs twice, keeping the larger.
Sources
- Korean Law Information Center, Ministry of Government Legislation — statutory text — Income Tax Act, article 14(3)6 and article 62. The double condition “or less and withheld”, the comparison structure “the greater of the following amounts” and item 1(a)’s “amount exceeding the threshold” are transcribed from the text. This version is in force from 1 January 2026, Act No. 21221 (amended 23 December 2025).
- Korean Law Information Center — statutory text — Income Tax Act, article 129 (withholding rates) and article 55(1). The 14, 25 and 45 per cent figures above, the P2P proviso and the eight-band basic rate table come from there. Same version.
- The arithmetic and the crossing points are ours — both items of article 62 were transcribed into code and swept in 10,000-won steps to find where they flip. Deductions and tax credits are not included (adding them moves the crossing point), and every amount is treated as falling under the 14 per cent rates. These figures illustrate the structure; they are not anyone’s tax bill.
Where to check further
- The filing obligation and procedure. A band where the tax does not rise is not the same as a band with no return — check Hometax.
- Local income tax. The tail of the familiar 15.4 per cent is not verified here — Wetax covers it.
- The health insurance threshold. The tax threshold and the insurance one sit in different documents — ask the National Health Insurance Service directly.
Written as of August 2026. The quoted provisions are the text as published by the Korean Law Information Center, and the tax figures and crossing points are our own, from transcribing article 62 into code — a simplified calculation with no deductions, as noted beneath the tables. Filing obligations, local income tax and the health insurance threshold were not verified. Our other everyday tools are in the calculator index.
