Korea's ISA (Individual Savings Account) holds deposits, funds and domestic listed shares in one place and taxes the gains inside it more lightly. That is why it gets called the all-in-one account.
1. How much tax does it save. On ₩6M of gains, an ordinary account is taxed ₩924,000 while an ISA takes ₩198,000 (lower-income band) or ₩396,000 (standard) — a saving of ₩726,000 or ₩528,000. Up to ₩3M the lower-income band pays nothing at all.
2. What is the risk. An ISA does not generate returns — it is a container for products. If what you put in loses money there is no tax to save. Deposit insurance is not counted separately, and closing before three years forfeits the benefit.
3. Where do you open one. At a bank or securities firm, one account per person. The tax-free ceiling splits by income into ₩4M and ₩2M. Figures are from Article 91-18 of the Restriction of Special Taxation Act.
How much tax does it save
Starting with the answer. What you save depends on how much the account made.
| Gain in the account | Ordinary account | ISA, low-income | ISA, general |
|---|---|---|---|
| 1.5 million won | 231,000 won | 0 | 0 |
| 3 million won | 462,000 won | 0 | 99,000 won |
| 6 million won | 924,000 won | 198,000 won | 396,000 won |
| 10 million won | 1,540,000 won | 594,000 won | 792,000 won |
On a 6 million won gain the low-income ceiling saves 726,000 won and the general ceiling 528,000 won. Proportionally the effect is larger on smaller gains: up to 3 million won, the low-income ceiling pays nothing at all.
One caveat. These savings assume the account made money. The ISA is not a product that generates returns — it is a container for products — so if what you put in loses money, there is no tax to save. More on that below.
Why the numbers come out this way is the next two sections. It reduces to two things: the tax-free ceiling and the rate above it.
What is my tax-free ceiling
Gains inside an ISA are untaxed up to a ceiling, and that ceiling splits two ways by income. In everyday use the two are called the low-income type and the general type.
| Type | Who qualifies | Tax-free ceiling |
|---|---|---|
| Low-income | Gross salary of 50 million won or less, or global income of 38 million won or less, in the preceding tax year. Farmers and fishers are included | 4 million won |
| General | Everyone else | 2 million won |
The timing is what trips people up. It is the preceding tax year — last year's income, not this year's. A drop in income now does not move you to the 4 million won ceiling straight away. The test is applied again when the contract term is extended, so meeting it then takes effect from that point.
Verification runs through the National Tax Service, which confirms the position and notifies your provider. If notice goes out that the earned-income condition is not met, the contract is treated as terminated on the day that notice is received. Which is a good reason to submit accurate income records at the outset.
What is taken above the ceiling
Gains above the tax-free ceiling are taxed at 9.9%. Interest and dividends in an ordinary deposit or fund are taxed at 15.4%, so this is 5.5 percentage points lighter. And it ends there — the amount is not aggregated into global income. For anyone with substantial financial income, that second part may matter more than the rate.
| Where the gain sits | Rate | Global income aggregation |
|---|---|---|
| Interest and dividends in an ordinary account | 15.4% | Aggregated above 20 million won a year |
| ISA gains above the tax-free ceiling | 9.9% | Not aggregated |
The statute writes different figures. What the law sets is 9%, and local income tax of a further 10% of that tax brings it to 9.9%. The 15.4% works the same way: 14% income tax plus local income tax on top. What actually comes out of the account is 9.9%, so the arithmetic above holds.
The timing differs too. An ordinary account withholds each time interest is paid, whereas the statute has the ISA withhold on the date the contract is terminated. Until then the money that would have gone out as tax stays in the account and keeps working.
Where the widest gap comes from
If you run several holdings, this matters more than the rate does. An ordinary account taxes whichever holdings made money and leaves the losing ones as losses. Make 5 million won in one fund and lose 3 million in another, and you are taxed on the 5 million. That is 770,000 won.
The ISA works differently. The statute provides that gains are computed after deducting losses. In the same situation the base becomes 2 million won of net gain, and 2 million sits inside even the general ceiling — so the tax is zero. Against the 770,000 won above, that single case is the whole difference.
Is the principal protected
This is where the misunderstanding usually sits. The ISA is neither safe nor risky in itself. It is an account, and how safe it is depends on what you put inside it. The statute allows a deliberately mixed set of assets.
| What you hold | Principal |
|---|---|
| Deposits, instalment savings, deposit money | Protected (covered by deposit insurance) |
| Funds (collective investment securities) | Not protected |
| Derivative-linked securities and bonds | Not protected |
| Domestic listed shares | Not protected |
Hold only deposits and your principal is safe but you earn only the interest; hold shares or funds and you may earn more or lose. Neither “an ISA is safe” nor “an ISA is risky investing” is accurate. Choosing what goes in is still yours to do.
And the tax break only means something when there is a gain. If the holdings lose money there is no tax to save in the first place, so reaching for riskier holdings because of the tax break inverts the order of the decision.
How does deposit insurance apply
One more thing on the safety side. The protection limit is 100 million won and it applies to each category of account on its own. Retirement pensions stand alone, pension savings stand alone, insurance stands alone. The ISA does not get its own line.
| Category | How the limit applies |
|---|---|
| Retirement pension (DC, IRP) | Separately, per participant |
| Pension savings | Aggregated among themselves, separately |
| Insurance | Separately |
| Ordinary deposits | Separately |
| ISA | Aggregated with ordinary deposits |
So 80 million won on deposit and 50 million in an ISA at the same bank reads as 100 million won of cover between them, not 100 million each. If you have concentrated a large balance in one place, it is worth a look.
If you need the money within three years
“You can't touch it for three years” is repeated everywhere. The text reads somewhat differently.
“Where, before three years have passed from the date the contract was first concluded, an amount exceeding the aggregate of the amounts paid in during the contract period is withdrawn, the contract shall be deemed terminated early on the date of that withdrawal.”
— Restriction of Special Taxation Act, Article 91-18(8)
The test is not whether you withdrew, but whether you withdrew more than you paid in. On 20 million won of contributions, taking money out within that 20 million reads as not triggering early termination. Effectively the principal stays available and only the growth on top has to sit out the three years.
The statute does not spell this out at that level of detail, though, and how it is handled in practice depends on your provider's terms and systems. If you actually need to withdraw, ask them first.
Terminating before three years claws back the tax relief received up to that point. Unavoidable grounds such as death or emigration are carved out.
Where and how do you open one
The statute sets out three routes to opening the account. Put next to the names people actually use, they line up like this.
| Common name | Counterparty in the statute | Who manages it |
|---|---|---|
| Brokerage type | Investment broker (securities firm) | You pick the holdings yourself |
| Discretionary type | Discretionary investment manager | You delegate the management |
| Trust type | Trustee, under a specified money trust | You give the instructions |
Even the requirement that the account be named “individual savings account” is written into the statute. Whichever route you take it is one per person, so you cannot hold one at a securities firm and another at a bank.
Opening one really comes down to two things: submitting your income records and choosing the account type. Once the records are in, the National Tax Service checks whether you meet the low-income condition and notifies your provider. That notification is what fixes your ceiling at 4 million or 2 million won — which is to say, it decides which row of the savings table above you land on.
The counter procedure itself — whether it can be done in-app, what documents are needed, how long it takes — is delegated by the statute to Presidential Decree and varies by firm. We did not verify it here.
Eligibility and limits at a glance
| Item | What applies |
|---|---|
| Age | 19 or over. Or 15 or over with earned income in the preceding tax year |
| Number of accounts | One per person |
| Minimum term | Three years |
| Total contribution cap | 100 million won |
| What it can hold | Deposits and instalment savings, funds, derivative-linked securities, domestic listed shares and similar |
The annual limit is 20 million won. The 100 million won total is written into the statute as a figure, but the annual limit is set by a formula placed in a separate table we could not open; press coverage of the 2026 tax reform bill confirms the annual limit is “maintained at 20 million won, unchanged.” That is reporting rather than an agency text, so check your provider's guidance before you pay in.
There is one carve-out on eligible holdings. Funds qualify, but foreign collective investment securities are excluded. Domestic listing appears to be the dividing line; which side a particular product falls on has to come from its own prospectus.
Should you open one now
The tax reform bill announced on 3 August 2026 makes substantial changes to the ISA. It is still a bill and has to pass the National Assembly, but it is worth knowing before deciding whether to open an account now.
| Item | Now (general ISA) | Under the bill |
|---|---|---|
| Contract term | Three years minimum, extensions unlimited | Three years, capped at five |
| Unused annual allowance | Carried into the next year | Carry-forward abolished |
| Opening a general ISA | No end date | Sunsets end of 2029 |
| New account type | — | Productive-finance ISA — interest and dividends fully exempt |
The new productive-finance ISA drops the 4 million and 2 million won ceilings for full exemption. In exchange the eligible holdings narrow to domestic listed shares, domestic equity funds, the National Growth Fund and business development companies, with domestically listed foreign ETFs and other overseas-facing products excluded. The caps are 20 million won a year and 200 million in total, designed around a ten-year horizon, and anyone subject to global taxation of financial income in the preceding three tax years cannot open one. A youth version adds an income deduction of 10% of contributions.
It applies to accounts opened on or after 1 January 2027, with the window closing on 31 December 2029. So an account opened today runs under today's rules. If you intend to hold mainly domestic shares, waiting for the fully exempt version becomes an option; if you want deposits or overseas assets in the account, the new type will not hold them, and opening now is the better move.
This comes from press coverage of the Ministry of Economy and Finance announcement. We could not reach the ministry's own text, and the contents may change during parliamentary review.
Rolling into a pension account at maturity
Once the three years are up and the contract matures, the balance can be moved into a pension account. Doing so raises your pension tax credit cap for that year.
“… where all or part of the balance of the account is paid into a pension account, that amount is included in pension account contributions (the tax credit cap is extended by 10% of the converted amount, up to 3 million won)”
“* The additional cap applies only in the year the ISA maturity balance is paid into the pension account”
— National Tax Service, guidance on the pension account tax credit
Move 30 million won across and the cap rises by 3 million, which is the 10%. But only in the year you move it. The pension credit itself runs on a 6 million won contribution cap (9 million including retirement pension contributions), at 15% for global income of 45 million won or less and 12% above that.
Deposit insurance generally is covered in this article, and where to park an emergency fund in this one. For pension accounts see pension savings and IRP, for fund taxation the ETF tax guide, and for the arithmetic the compound interest calculator.
Three things to check before you open one
Of everything above, three points are where money actually turns on the detail.
One, your ceiling is decided by last year's income. Not this year's. If last year's gross salary came in just over 50 million won, this contract runs on the 2 million won ceiling, and the test comes round again at extension.
Two, if a large balance sits at one bank, count the deposit insurance. The ISA is aggregated with ordinary deposits. It is not given its own limit the way retirement pensions and pension savings are.
Three, if you might need the money inside three years, ask before you pay in. The text reads as allowing withdrawals within the principal you have contributed, but the actual handling sits with your provider's terms. Better to have that answer in advance.
Questions people ask
How much tax can I actually save?
It depends on the gain. On 6 million won over three years, an ordinary account is taxed 924,000 won against 198,000 for the low-income ceiling and 396,000 for the general one. Up to 3 million won of gain, the low-income ceiling pays nothing. The rates are from the statute; the amounts are our arithmetic.
It changes in 2027 — should I still open one now?
An account opened now runs under the current rules; the bill applies to accounts opened on or after 1 January 2027. If you plan to hold mainly domestic shares, waiting for the fully exempt productive-finance version is now an option. If you want deposits or overseas assets in there, the new type will not hold them, so opening now makes sense. It is still a government bill and may change in the National Assembly.
Is my principal protected?
It depends on what you hold. Deposits and instalment savings are protected; funds, derivative-linked securities and shares are not. The ISA is a tax rule, not a capital guarantee.
Does any withdrawal inside three years terminate the account?
No. The test in the statute is the aggregate of the amounts paid in, and early termination is deemed to occur on the day a withdrawal exceeds that aggregate. Staying within the principal reads as not triggering it — but handling varies by provider, so confirm.
How do I know which ceiling applies to me?
Gross salary of 50 million won or less, or global income of 38 million won or less, in the preceding year puts you on the 4 million won ceiling. The National Tax Service verifies and notifies your provider, so it is settled from the income records you submit when opening the account.
Securities firm or bank — where should I open it?
The statute recognises all three routes: investment brokers, discretionary managers and trustees. Picking holdings yourself points to the brokerage type and delegating to the discretionary type, but it is one account per person, so moving later means going through a transfer. Fees and available products differ by firm, so compare.
How much can I pay in per year?
The 100 million won total appears in the statute, but the annual limit is set by a formula in a separate table we could not open. Check the guidance from the provider you open with.
Can it hold foreign ETFs?
The statute allows funds while excluding foreign collective investment securities in parentheses. Domestic listing appears to be the dividing line, but which side a given product falls on has to come from its prospectus.
Sources
- Restriction of Special Taxation Act (in force 1 January 2026; Act No. 21223) — Article 91-18 (special taxation for individual savings accounts) (checked August 2026). The eligibility routes, “notwithstanding Article 129 of the Income Tax Act, a rate of 9 percent” and the exclusion from global income, the 4 million and 2 million won ceilings and their conditions, the three counterparties an account may be opened with and the required account name, one account per person, the three-year term, the 100 million won cap and the six categories of eligible assets, the deduction of losses, withholding on the termination date, clawback and unavoidable grounds, “an amount exceeding the aggregate of the amounts paid in… deemed terminated early,” the NTS verification and notification, deemed expiry on a pension rollover, and the delegation of opening procedures to Presidential Decree all come from this article.
- Income Tax Act, Article 129(1)1(d) — Korean Law Information Center (checked August 2026). The source for the 14% withholding rate on other interest income. The 15.4% and 9.9% used above are those statutory rates plus local income tax of 10% of the tax.
- National Tax Service — Tax credits — pension account tax credit (checked August 2026). The 10%-of-converted-amount extension up to 3 million won, the “only in the year” qualifier, and the pension credit's own 6 million won cap (9 million including retirement pension) at 15% and 12%.
- Enforcement Decree of the Depositor Protection Act, Article 18(7) — Korean Law Information Center (checked August 2026). The 100 million won payout limit, the separate application to each category in subparagraph 1, and subparagraph 2 aggregating the ISA with other deposit claims. Covered in detail in the deposit insurance article.
- The savings figures are our own calculation. The amounts in the table and the chart are the statutory rates (15.4% and 9.9%) applied to each gain — they are not figures any agency publishes. Actual outcomes vary with product fees and how the account performs.
- The 2026 tax reform bill — press reporting, not an agency text. Herald Business and Newspim (both checked August 2026) are the source for the five-year cap on the general ISA's term, the abolition of annual carry-forward, the end-2029 sunset, the annual limit staying at 20 million won, and the productive-finance ISA's full exemption, 20 million won annual and 200 million won total caps, restricted holdings, exclusion of those subject to global taxation of financial income, the youth version's 10% deduction, and the 1 January 2027 start. We could not reach the Ministry of Economy and Finance's own release, and parliamentary review may change the contents.
- What we read into it. “Withdrawals within the principal are not early termination” is our reading of paragraph 8 in reverse, and “retirement pensions, pension savings and insurance each stand alone while the ISA is aggregated with deposits” is what comes out of setting the Decree's subparagraphs side by side. Neither text explains itself that way. The statute also does not use the names “low-income type” and “general type,” or “brokerage,” “discretionary” and “trust” type — it divides them only by subparagraph and by counterparty — but the names are in common use, so we kept them.
Where to check further
This article answers as far as the statute and the National Tax Service guidance can take it. Beyond that the answers vary by firm, so here is where to look.
- Fees and available holdings — compare by firm. Fees come off the tax saving to give what you actually keep. The Korea Financial Investment Association runs ISA Damoa, where fees and returns by firm can be checked here. It is an association compilation, not an agency filing.
- Opening and early-termination handling — ask the firm. Whether it can be opened remotely, what documents are needed, how withdrawals within the principal are actually processed, and how far the “unavoidable grounds” are recognised are all left by the statute to Presidential Decree and to each firm's terms.
- The final shape of the tax reform — check again after it passes. The 2027 changes above are still a government bill and may change in review. Once settled they will appear in the National Tax Service guidance and the legislation. We will update this article then.
As of August 2026. Requirements and rates come from Article 91-18 of the Restriction of Special Taxation Act, the pension rollover from National Tax Service guidance, and deposit insurance from the Enforcement Decree of the Depositor Protection Act; the savings amounts are our own arithmetic on those rates. This is general information, not investment advice or tax advice. Confirm opening and termination questions with your provider, and tax questions with a tax professional.
