The interest that lands in a Korean savings account at maturity has already been taxed. The familiar 15.4% is the Income Tax Act Art. 129 withholding rate of 14% plus 1.4% of local income tax (10% of that income tax) under Local Tax Act Art. 103-13. But interest on a private loan is withheld at 25%, income where the real name is not confirmed at 45%, and dividends are not taxed at all if the income tax comes to under 1,000 won. Pick the amount and the type of income to see what is withheld and what you receive.
1. Withholding income tax on interest and dividends is 14% by default — 25% on private-loan interest and silent-partner dividends (Art. 129(1)).
2. Local income tax is 10% of that income tax, making 15.4% in all (Local Tax Act Art. 103-13).
3. Dividends are not taxed if the income tax is under 1,000 won, but interest is taxed however small (Art. 86, item 1).
Calculator
Updates as you type. Income tax at the Art. 129 rate, plus local income tax of 10% of that. Fractions of a won are dropped (our method); institutions may round the last digits differently. For the real-name case where the Act on Real Name Financial Transactions Art. 5 applies, that Act’s rate is used instead.
Rates — Income Tax Act Art. 129
| Type | What the source says | Worth noting (ours) |
|---|---|---|
| Para. 1, item 1(d) | Other interest income: 14/100 | Most deposit, savings and bond interest |
| Para. 1, item 1(b) | Profit from non-business loans: 25/100; but interest received via a registered online investment-linked (P2P) lender: 14/100 | Interest on money lent to a person is 25% |
| Para. 1, item 1(c) | Excess refunds from workplace mutual-aid associations: basic rates | Not in the calculator |
| Para. 1, item 2 | Silent-partner dividends from a joint business: 25/100; other dividends: 14/100 | Share dividends are 14% |
| Para. 2, item 1 | Interest on deposits and auction money paid into court: 14/100 | — |
| Para. 2, item 2 | Income where the real name is not confirmed: 45/100; where Art. 5 of the Act on Real Name Financial Transactions applies, the rate in that article | We did not read that Act’s rate |
Local income tax and the small-amount rule
| Type | What the source says | Worth noting (ours) |
|---|---|---|
| Local Tax Act Art. 103-13(1) | When a withholding agent withholds income tax from a resident, it collects 10/100 of that income tax (after any special tax treatment) as individual local income tax at the same time. | 14% × 10% = 1.4%; 25% × 10% = 2.5% (our sum) |
| Income Tax Act Art. 86, item 1 | Tax is not collected where withholding tax on income under Art. 127(1) is under 1,000 won, except interest income (and certain business income set by decree). | Dividends get the small-amount rule; interest does not |
Added together, ordinary interest and dividends lose 15.4%, private-loan interest and silent-partner dividends 27.5%, and unconfirmed-name income 49.5% (our sums). Where special tax treatment brings income tax to nil (for example tax-free comprehensive savings), local income tax is also nil, being 10% of the tax “after special treatment” (our reading of the bracket in Art. 103-13(1)).
Three sums — our example
| Case (our example) | Withheld / received | Worth noting (ours) |
|---|---|---|
| Deposit interest of 1,000,000 won | 154,000 / 846,000 won | Income tax 140,000 + local tax 14,000 |
| Interest of 1,000,000 won on a loan to a person | 275,000 / 725,000 won | Non-business loan 25% + 2.5% |
| Dividend of 7,000 won | 0 / 7,000 won | Income tax 980 won — under 1,000, not collected |
If the same 7,000 won were interest, 980 won of income tax and 98 won of local tax, 1,078 won in all, would be withheld and 5,922 won paid out, because interest is excluded from the Art. 86 small-amount rule. The dividend escapes its 980 won only thanks to that same article.
When withholding is the end of it, and when it isn’t
Income Tax Act Art. 14(3)6 keeps interest and dividends out of comprehensive income where they total 20 million won or less and were withheld. Within that range the tax in the calculator is final. Above it, comprehensive taxation applies and Korean company dividends get 11% added — see dividend gross-up calculator. Private-loan interest withheld at 25% also counts towards the 20 million won total (our reading of the wording).
We dropped fractions of a won (our method). We did not check the rule institutions use for the last digits, so trust your statement for differences of a few won.
Checklist
- ☐ Interest or dividend? (only dividends get the under-1,000 won rule)
- ☐ Interest on money lent to a person is 25% (14% via a registered P2P lender)
- ☐ Add the 10% local tax to see the real rate
- ☐ Does the year’s interest and dividend total exceed 20 million won?
Questions that remain
Is installment-savings interest also 15.4%?
It is “other interest income” under Art. 129(1)1(d), so 14% plus 1.4% local tax — unless the product carries a tax-free or separate-taxation special rule.
What about foreign share dividends?
Art. 129(4) says foreign tax paid abroad comes off the withholding tax, with any excess treated as nil. We did not cover country rates.
What if too much was withheld?
Ask the paying institution first. This page covers the rates only.
Sources
- Korean law database (law.go.kr) — Income Tax Act Arts. 14, 86, 129 — source (current text, effective 1 July 2026, Act No. 21221; checked 22 October 2026). Art. 129(1) items 1–2 (14%, 25%, P2P 14%), (2) (court deposits 14%, unconfirmed name 45%), (4) (foreign tax), Art. 86 item 1 (under 1,000 won, interest excluded), Art. 14(3)6 (20 million won).
- Korean law database — Local Tax Act Art. 103-13 — source (current text, effective 1 July 2026, Act No. 21308; checked 22 October 2026). 10/100 of withheld income tax collected as individual local income tax.
- Not read. The rate under Art. 5 of the Act on Real Name Financial Transactions, institutions’ rounding rules, any small-amount rule for local tax.
- What we added. The “worth noting” column and the Korean everyday gloss.
Where to check further
- Your bank’s interest or dividend statement — the tax actually withheld.
- NTS Hometax — payment statements.
Written on 22 October 2026. The content is from the source; the glosses are ours.
