Few taxes attract as much misinformation as Korea's inheritance tax. You've probably heard that "the child deduction rose to ₩500M" or "the top rate fell to 40%."
⚠️ Let's correct that first. Those are proposals that have not passed the National Assembly. The 2024 reform bill (₩500M child deduction, 40% top rate) was rejected that December and hasn't been enacted since. Filing today follows the existing law.
This guide covers the rules actually in force. If a news story differs, it's likely reporting a proposal.
1. Most families pay nothing
| Lump-sum deduction | ₩500M |
| Spousal deduction (minimum) | ₩500M |
| Combined | Roughly ₩1B tax-free |
Without a surviving spouse, ₩500M is the threshold. Financial-asset and co-residence deductions can raise it further.
2. Korea taxes the estate, not the heir
- Inheritance tax — computed on the entire estate first, then divided (estate tax model)
- Gift tax — computed per recipient
So having more heirs doesn't reduce the bill. The government's proposed shift to an heir-based model addresses this, but it remains pending.
3. Rate table
| Tax base | Rate · progressive deduction |
| Up to ₩100M | 10% · 0 |
| ₩100M – ₩500M | 20% · ₩10M |
| ₩500M – ₩1B | 30% · ₩60M |
| ₩1B – ₩3B | 40% · ₩160M |
| Over ₩3B | 50% · ₩460M |
4. The deductions that decide everything
| Lump-sum deduction | ₩500M — chosen when it exceeds basic plus personal deductions |
| Basic + personal | ₩200M basic + ₩50M per child |
| Spousal deduction | Based on what the spouse actually inherits, ₩500M minimum to ₩3B maximum |
| Financial asset deduction | 20% of net financial assets, up to ₩200M |
| Co-residence home deduction | Up to ₩600M (10+ years of shared residence) |
The child deduction is ₩50M, not ₩500M. The larger figure comes from the unpassed bill. Unless there are many children, the ₩500M lump-sum deduction is usually better — you take whichever is larger.
The spousal deduction is the most powerful lever, but loading assets onto a spouse creates a second inheritance later. Plan both events together.
5. Filing and payment
| Deadline | 6 months from month-end of death |
| Overseas residents | 9 months |
| Filing credit | 3% of computed tax for timely filing |
| Installments | Above ₩10M, split within two months |
| Annual installments | Above ₩20M, spread up to 10 years |
| Payment in kind | Property or securities, where conditions are met |
File even if no tax is due — the valuation becomes your acquisition cost when the property is later sold.
6. Traps
- Gifts within 10 years are added back to the estate (5 years for non-heirs). Early gifting isn't a clean escape.
- Large withdrawals before death can be presumed part of the estate if unexplained.
- Insurance proceeds and severance may count as estate assets.
- Debts and funeral costs are deductible — keep evidence.
- Renunciation or limited acceptance must be decided within three months of learning of the death — critical when debts exceed assets.
Property valuation is decisive. How real estate is valued changes the tax substantially — and that valuation becomes the acquisition cost for future capital gains tax.
FAQ
When do the ₩500M child deduction and 40% rate take effect?
They aren't confirmed. The bill remains pending with no set timeline. When news says "reform," check whether it passed.
Do more heirs mean less tax?
Not under the current estate-tax model.
My parents own only one home — is tax due?
With a surviving spouse, roughly ₩1B is untaxed, and co-residence deductions can raise that. But valuation, not published price, is the basis.
Is gifting better than inheriting?
Sometimes — but gifts within 10 years are added back, so timing matters.
The biggest risk here isn't the rate — it's bad information. Start by separating proposals from law.
This is general information as of July 2026, not tax advice. Outcomes vary widely with asset composition and family structure, and reform discussions continue — consult a tax professional when an inheritance arises.
