Korea’s hometown love donation lets you give to a local government you do not live in and receive a tax credit and a thank-you gift. The credit rate differs by band: up to 100,000 won it is 100/110 of the gift, from 100,000 to 200,000 won 40%, and above that 15%. The 40% band was added by a March 2025 amendment. We read article 58 of the Restriction of Special Taxation Act and the Hometown Love Donation Act and Decree as written.
1. Giving 100,000 won earns a 90,909 won income tax credit. The formula is donation × 100/110. At 200,000 won it is 130,909 won (our arithmetic).
2. Thank-you gifts are capped at 30% of the donation. For 100,000 won that is up to 30,000 won worth of local products or local vouchers. Cash is not allowed.
3. The annual cap is 20 million won, and you cannot give to your own local government. Local governments may raise donations only from people who are not their residents.
The credit formula — Restriction of Special Taxation Act article 58(1)
| Amount donated | Credit formula | Basis |
|---|---|---|
| 100,000 won or less | Donation × 100/110 | Item 1 |
| Over 100,000 up to 200,000 won | 100,000 × 100/110 + (donation − 100,000) × 40/100 | Item 2 |
| Over 200,000 up to 20 million won | 100,000 × 100/110 + 100,000 × 40/100 + (donation − 200,000) × 15/100 | Item 3 |
The bracket in item 3 applies 30% instead of 15% to gifts made to a local government declared a special disaster area within the period set by decree from the declaration. Item 2 (40%) came in with Act No. 20778 (14 March 2025), and its addendum applies it from donations in the tax period containing its effective date.
By amount
| Donation | Tax credit (income tax) | Gift cap (30%) |
|---|---|---|
| 100,000 won | 90,909 won | 30,000 won |
| 200,000 won | 130,909 won | 60,000 won |
| 500,000 won | 175,909 won | 150,000 won |
| 1,000,000 won | 250,909 won | 300,000 won |
| 20 million won (cap) | 3,100,909 won | 6 million won |
The arithmetic is ours (fractions of a won dropped). 90,909 won is 100,000 divided by 1.1. The gift cap is “30/100 of each donation,” so it is counted per donation (Decree art. 5(1)). Local income tax is not covered here.
Limits and no double-dipping — article 58(2) and (3)
- The credit cannot exceed that year’s calculated comprehensive income tax. If you owe little tax, the credit is limited to that.
- Business owners take the same credit up to 100,000 won and put amounts above that into necessary expenses, within income after carried-forward losses.
- Hometown donations credited under this article cannot also be claimed under the Income Tax Act’s ordinary donation rules (arts. 34(2) and 59-4(4)).
Who and where — the Hometown Love Donation Act
| Item | What the law says | Basis |
|---|---|---|
| Who may receive | Local governments where the donor is not a resident | Act art. 4(1) |
| Annual cap | 20 million won per person | Act art. 8(3) |
| Thank-you gifts | Up to 30% of the donation · local products, vouchers usable only in that area, and so on | Act art. 9, Decree art. 5 |
| Banned gifts | Cash, expensive precious metals and jewellery, securities other than local vouchers, e-money and similar | Act art. 9(3), Decree art. 5(2) |
| Banned donations | In another person’s name or a false name, or to a local government you have business, employment or contract ties with | Act art. 5 |
A 2024 amendment also lets donors designate a project or purpose (Act art. 8-2). Hometown Love Day is 4 September each year (Decree art. 1-2).
Checklist
- ☐ Not the local government of your registered address
- ☐ 100,000 won means a 90,909 won credit and up to 30,000 won in gifts
- ☐ Up to 200,000 won is the 40% band — 15% above that
- ☐ If your calculated tax is below the credit, the excess is lost
- ☐ Do not claim it again as an ordinary donation at year-end settlement
Questions that remain
What does 100,000 won actually cost me?
On paper, the 90,909 won income tax credit plus up to 30,000 won in gifts exceeds the 100,000 won given. But the credit matters only if you owe tax, and the gift is not cash.
Can I split it across several local governments?
The cap in article 8(3) is 20 million won “per person per year,” so gifts to several places are added up. The credit formula also reads as applying to the total given in that tax year.
Sources
- Restriction of Special Taxation Act [in force 18 Sep 2026] [Act No. 21467] — original text (checked 30 September 2026). Source for article 58(1) to (3) (100/110, 40%, 15%, limit, no double claims) and article 9 of the addendum to Act No. 20778 (14 March 2025).
- Hometown Love Donation Act [in force 1 Jan 2025] [Act No. 20314] — original text. Source for articles 4, 5, 8 (20 million won), 8-2 and 9.
- Enforcement Decree of the Hometown Love Donation Act [in force 26 Mar 2026] [Presidential Decree No. 35396] — original text. Source for article 1-2 (4 September) and article 5 (30%, banned items).
- Our own working. Credits and gift caps by amount are our arithmetic from the formulas.
Where to check further
- Donating and choosing gifts — the Gohyang Sarang e-eum portal or designated banks.
- Tax dates — tax calendar.
Written on 30 September 2026. Articles are from the National Law Information Center; the tables and arithmetic are ours.
