If you claim several income deductions at year-end settlement, there is one more check at the end. Article 132-2 of Korea’s Restriction of Special Taxation Act says that when the listed deductions — card spending, housing loans, subscription savings, the Yellow Umbrella fund and others — add up to more than 25 million won, the excess is treated as nil. This is the overall cap on income deductions. The article lists item by item what counts, and an amendment of 12 May 2026 added the National Growth Fund deduction (item 7-2). Our calculator takes each deduction and shows how much survives the cap.
1. Listed deductions are added; anything over 25m is treated as nil (Art. 132-2(1)).
2. In: housing-loan special deduction, subscription savings, cards, Yellow Umbrella, employee stock, venture funds (10%), National Growth Fund, long-term fund savings.
3. Out: the insurance-premium deduction and direct venture investment (Art. 16(1)3, 4, 6).
Calculator
Updates as you type. Enter each deduction after its own limits. The items listed in Art. 132-2(1) are added, and anything over 25,000,000 won is treated as nil. The insurance-premium deduction and Art. 16(1)3, 4 and 6 venture deductions are not on the list. One person, one year.
What counts — Art. 132-2(1)
| Item | Deduction under the cap (summary) | Worth noting (ours) |
|---|---|---|
| 2 | The special income deduction under Income Tax Act Art. 52, except the insurance-premium deduction in Art. 52(1) | What remains is housing: lease-loan repayments (para. 4) and long-term mortgage interest (para. 5) |
| 3 | Venture fund contributions etc. under Art. 16(1), except items 3, 4 and 6 | In: venture and new-technology funds, venture trusts, start-up private funds (items 1, 2, 5; 10%) |
| 4 | Small business mutual aid under Art. 86-3 (Yellow Umbrella) | — |
| 5 | Housing subscription savings under Art. 87(2) | — |
| 6 | Employee stock ownership association contributions under Art. 88-4(1) | — |
| 7 | Long-term collective investment savings under Art. 91-16 | — |
| 7-2 | National Growth Fund savings under Art. 91-28(2) | Added 12 May 2026; from settlements and returns after that |
| 9 | Card and other spending under Art. 126-2 | — |
Items 1 and 8 have been deleted. Deductions not on the list — personal allowances, the pension-contribution deduction and the insurance-premium deduction for health and employment insurance — are, on our reading, outside the cap, since only listed items are added. The cap does not apply to tax credits: the monthly-rent credit and the pension-account credit sit outside this sum.
Three worked cases — our examples
| Example (ours) | Allowed under the cap | Worth noting (ours) |
|---|---|---|
| Cards 3m + mortgage interest 18m + National Growth Fund 12m = 33m | 25m won | 8m treated as nil |
| Cards 3m + Yellow Umbrella 5m + venture fund 1m = 9m | 9m won | 16m of room left |
| Direct venture investment of 30m → 30m deduction under Art. 16 | 0 under the cap | Item 4 investment is off the list; Art. 16’s own 50%-of-income limit applies instead |
In the first case each amount is assumed to be after that deduction’s own limit. Long-term mortgage interest is normally capped at 8m a year under Income Tax Act Art. 52(5)–(6), with other caps depending on the loan; the 18m in our example assumes one of those higher caps applies.
The venture deduction — why only part counts (Art. 16)
| Type | What the source says | Worth noting (ours) |
|---|---|---|
| Rate | Venture fund contributions (item 1), venture investment trusts (item 2) and start-up private equity (item 5): 10% of the amount | 10m gives 1m (ours) |
| Direct | Via individual investment associations (item 3), direct into venture firms (item 4), crowdfunding (item 6): 100% up to 30m, 70% to 50m, 30% above | 50m gives 30m + 14m = 44m (ours) |
| Limit | 50% of aggregate income for the year | Separate from the overall cap |
| Deadline | Invest by 31 December 2028; you may choose a year up to two years after investing | Buying others’ stakes does not count |
| Clawback | Transfer or recovery within 3 years, or selling or redeeming trust units, recovers the tax saved (death and some other reasons excepted) | — |
So the overall cap catches only the 10% side (items 1, 2, 5) and lets the generous direct-investment side (items 3, 4, 6) through. The calculator keeps them in separate fields and leaves direct investment out of the 25m sum.
Questions that remain
Is there an order in which deductions are cut? Article 132-2 only says that the excess over 25m is treated as nil; it does not say which deduction goes first, and we found no matching article in the Enforcement Decree. Only the total affects the tax, so the calculator works on the total.
How is the National Growth Fund deduction itself worked out? 40% up to 30m, at most 18m — see the National Growth Fund deduction calculator.
Sources
- Korean law database (law.go.kr) — Restriction of Special Taxation Act Arts. 132-2, 16 and Addenda (Act No. 21612) — source (current text, effective 18 September 2026, Act No. 21467; checked 29 October 2026). The 25m cap and items 2–9 (1 and 8 deleted); item 7-2 added on 12 May 2026 and Addenda Art. 3; Art. 16(1)–(4) (10%, 100/70/30%, 50% of aggregate income, 31 December 2028, 3-year clawback).
- Korean law database — Income Tax Act Art. 52 — source (current text, effective 1 July 2026, Act No. 21221; checked 29 October 2026). Special deduction = insurance premiums (para. 1), 40% of lease-loan repayments (para. 4, 4m a year with subscription savings), mortgage interest (paras. 5–6); excess over aggregate income nil (para. 8).
- Korean law database — Restriction of Special Taxation Act Enforcement Decree — source (current text, effective 18 September 2026, Decree No. 36587). Checked: no article on the overall cap.
- Not read. Detailed limits of each deduction (Arts. 87, 88-4, 91-16, 126-2), Enforcement Decree Art. 14, the NTS year-end settlement guide (due in November).
- What we added. The “worth noting” column and the Korean everyday gloss.
Written on 29 October 2026. The content is from the source; the glosses are ours.
