Conversations about Korean inheritance tax tend to start at the 50% top rate. But what actually decides the bill is the deductions, not the rate. With a spouse and children, nothing is due up to 1bn won — that is what the statute says.
1. The 500m won lump sum is effectively the default. It is the greater of "200m won basic plus personal deductions" and 500m won — and it takes 7 children for the former to win.
2. The spouse deduction is 500m won even if the spouse inherits nothing. Article 19(4) says so.
3. The financial-asset deduction has «four» bands, not a flat 20%.
4. The 3% filing credit is not 3% of the whole tax — it is 3% of what remains after other credits.
Enter the estate and the family, and it works through the deductions to the tax due in the order the statute sets.
It follows the order the statute sets. The lump-sum deduction is the greater of "200m basic plus personal deductions" and 500m won (art. 21(1)). The spouse deduction is 500m won where the spouse actually inherits less than that (art. 19(4)); at or above it, the amount actually inherited applies, capped by the statutory share and by 3bn won (art. 19(1)). The statutory share adds half again to a child's share for the spouse (Civil Act art. 1009(2)). The financial-asset deduction is the greater of 20% and 20m won once net financial assets exceed 20m, capped at 200m (art. 22). Rates are in art. 26 and the 3% filing credit in art. 69(1). Family-business, farming and co-residence deductions, disaster relief, gifts added back, the generation-skipping surcharge and the gift-tax credit are not included. An estimate — the real figure is fixed on filing and assessment.
Most estates pay nothing
Because the deductions come first. With a spouse and children, the 500m won lump sum plus the 500m won spouse minimum leaves the base at zero up to 1bn won.
Without a spouse the threshold is 500m won. On the same 1.5bn won estate, a spouse means 56.26m won; no spouse means 215.34m won (with 300m won of net financial assets).
The lump sum is effectively the default
Article 21(1) gives the greater of the combined basic and personal deductions and 500m won.
The basic deduction is 200m won and each child adds 50m won, so the combined figure only overtakes 500m won at 7 children — at six they are exactly equal. For most families the lump sum is simply the better one.
Two exceptions. Where no return is filed the deduction is 500m won regardless (proviso to art. 21(1)); and where the spouse inherits alone, the lump sum is not available at all — only the basic and personal deductions apply (art. 21(2)).
The spouse deduction: 500m won even for nothing
Article 19 deducts what the spouse actually inherits, capped by a figure derived from the statutory share and by 3bn won, whichever is smaller. Then paragraph (4) adds that where the spouse inherits nothing, or less than 500m won, the deduction is 500m won.
The chart takes an estate of 1.5bn won where the spouse actually inherits 600m won and net financial assets are 300m won (an example). Deductions of 1.16bn won leave a base of 340m won, and tax of 58m won less the 1.74m won filing credit leaves 56.26m won.
The cap formula is not in the running text but in an image inside the article: (A − B + C) × D − E, where D is the spouse's statutory share under Civil Act article 1009. A spouse takes half again a child's share, so with two children the split is 1.5 : 1 : 1 and the spouse's share is 1.5 of 3.5.
One thing turns here. What paragraph (4) tests is the amount actually inherited — not the figure left after the cap. So where the spouse actually receives 500m won or more but the statutory-share cap is smaller, only the cap is deducted. The National Tax Service says the same in two lines: 500m won where less than that is inherited, and the amount actually inherited, or the cap where it exceeds the cap, above it. This calculator splits it the same way.
Four bands, not a flat 20%
| Net financial assets | Deduction |
|---|---|
| Up to 20m won | all of it |
| 20m won to 100m won | 20m won (20% has not caught up) |
| 100m won to 1bn won | 20% |
| Above 1bn won | 200m won (cap) |
| Article 22(1). "Net" means financial assets less financial debts, and largest-shareholder stock and undeclared assets held in another's name are excluded (art. 22(2)). | |
The filing credit: 3% of what?
Article 69(1) takes the computed tax, subtracts the amounts listed — tax whose collection has been deferred, and credits or reliefs given under this or another Act — and gives 3% of the remainder.
So it is not 3% of the whole. This calculator applies no other credits, so it shows 3% of the computed tax — a gift-tax credit or a foreign-tax credit would reduce it.
Questions that remain
What about a 40% rate and a 500m child deduction?
Not in the statute as it now stands. The top rate in article 26 is 50% above 3bn won, and the per-child deduction in article 20 is 50m won. Amendments have been discussed; this calculator uses the law currently in force.
Does having more heirs reduce the tax?
No. Korea taxes the estate as a whole, once, rather than taxing each heir on what they receive. More children do raise the personal deductions, but the tax is not divided among heirs.
What is left out?
Family-business, farming and co-residence deductions, disaster relief, gifts made within ten years added back (art. 13), the generation-skipping surcharge (art. 27) and the gift-tax credit (art. 28). The added-back gifts in particular can change the figure substantially.
When is it due?
Within six months of the end of the month in which the death occurred (art. 67). Meeting that deadline earns the 3% credit; missing it loses the credit and adds penalties on top.
Sources
Inheritance Tax and Gift Tax Act [in force 1 October 2025] [Act no. 21065] — art. 18 (basic), 19 (spouse), 20 (personal), 21 (lump sum), 22 (financial assets), 24 (ceiling on deductions), 26 (rates), 69 (filing credit).
Civil Act art. 1009(2) — a spouse takes half again the share of a lineal descendant.
National Tax Service, "Inheritance tax > item-by-item guidance > deductions" — used to confirm the two-line split of the spouse deduction: 500m won where less than that is inherited, and the amount actually inherited (or the cap, where it exceeds the cap) above it.
The articles were read directly on the Korean Law Information Centre. Both the rate table and the spouse-cap formula sit in images inside the articles rather than in the running text, and were taken from their alt text.
The calculator was checked against the same model — 5,500 combinations of estate, children, spouse, amount actually inherited, net financial assets and filing status, all matching.
Where to check
The scheme and its traps are in the inheritance tax guide. Giving during life is covered by the gift tax calculator and the ten-year aggregation rule; passing on a home continues in capital gains tax.
