Young people who join a Korean small or medium-sized enterprise (SME) can have 90% of their income tax cut for 5 years, up to 2 million won a year. People aged 60 or over, people with disabilities and workers returning after a career break get 70% for 3 years. But the article sets a deadline: you must start the job by 31 December 2026. We read article 30 of the Restriction of Special Taxation Act and article 27 of its Decree as written.
1. Youth 90% for 5 years, others 70% for 3 years, capped at 2 million won a year. It covers wage income up to the month in which that period ends, counted from the start date (Act art. 30(1)).
2. “Youth” means 15 to 34 on the date the employment contract is signed. Military service as a conscript, social service agent and similar is deducted from your age, up to 6 years (Decree art. 27(1)1).
3. You must apply. Apply to your employer (the withholding agent); after leaving, you can apply to the tax office for your address (Act art. 30(2)).
The article — Act art. 30(1)
Where youth, persons aged 60 or over, persons with disabilities, workers returning after a career break … and others prescribed by Presidential Decree take up employment with an SME … between 1 January 2012 (1 January 2014 for persons aged 60 or over or with disabilities) and 31 December 2026, tax equal to 70/100 (90/100 for youth) of income tax on wage income from that SME arising up to the month that includes the day 3 years (5 years for youth) after the start date … shall be reduced (capped at 2 million won per tax year).
The next sentence counts the period from the first start date. Moving to another SME or rejoining the same one does not restart the clock.
Who qualifies — Decree art. 27
| Group | Test | Reduction |
|---|---|---|
| Youth | 15 to 34 on the contract date (military service of up to 6 years deducted) | 90% · 5 years |
| 60 or over | 60 or over on the contract date | 70% · 3 years |
| Disability | Registered disability, wounded veterans and others | 70% · 3 years |
| Career-break returners | As defined in Act art. 29-8(2) | 70% · 3 years |
Service deducted from age covers conscripts (including reservists on full-time duty, conscripted police and firefighters), social service agents and active-duty officers, warrant officers and NCOs. Someone aged 36 at contract with 2 years as a conscript counts as 34 (our example).
Who is excluded — art. 27(2)
- Executives as defined in the Corporate Tax Decree
- The largest shareholder or investor (the owner, for sole proprietorships), their spouse, their lineal relatives (and spouses) and relatives
- Daily workers
- Anyone whose National Pension or workplace health insurance contributions cannot be confirmed as paid (unless not required to join)
Which employers — art. 27(3)
The employer must be an SME under the Framework Act on SMEs (non-profits included) whose main business is in the industries the Decree lists: agriculture, forestry and fishing, manufacturing, construction, wholesale and retail, transport and storage, accommodation and food (excluding bars and non-alcoholic beverage outlets), information and communications (with exclusions), R&D, advertising, social welfare services and more. Central and local government, public institutions and local public enterprises are excluded. The list is long and we have not reproduced it all, so check that your employer’s industry is on it.
How much it cuts — our example
| Income tax eligible | Youth (90%) | 60+ and others (70%) |
|---|---|---|
| 1 million won a year | 900,000 won | 700,000 won |
| 2 million won a year | 1.8 million won | 1.4 million won |
| 3 million won a year | 2.7 million → 2 million won (cap) | 2.1 million → 2 million won (cap) |
The amounts are our example, treating the figure in the table as the income tax on wages from the SME. With other income, a split of the eligible tax may apply; we did not cover that formula this time. For youth, the cap bites from about 2.22 million won of income tax (2 million ÷ 0.9, our arithmetic).
Applying — Act art. 30(2) and (3)
- The employee applies to the employer; after leaving, to the head of the tax office for their address.
- The employer files the list of applicants with the tax office by the 10th of the following month.
- Missed it because you did not know? A request for correction may recover it — see amended returns and refund claims.
Checklist
- ☐ Start date on or before 31 December 2026
- ☐ Age on the contract date — 34 or under after deducting service (up to 6 years)?
- ☐ Employer is an SME in a listed industry, not a public body
- ☐ Not an executive, a largest shareholder’s family member or a daily worker
- ☐ Application handed to your employer — the period runs from your first start date
Questions that remain
What if I start in 2027?
As of writing, the article covers employment “by 31 December 2026.” We did not check whether it will be extended; if it is, the article will change, so check the National Law Information Center then.
Does changing employer restart the 5 years?
No. The second sentence of article 30(1) counts from the first start date even if you move to another SME or rejoin.
Sources
- Restriction of Special Taxation Act [in force 18 Sep 2026] [Act No. 21467] — original text (checked 1 October 2026). Article 30(1) (31 December 2026, 3 and 5 years, 70/100 and 90/100, 2 million won, first start date), (2) (application) and (3) (10th of the next month).
- Enforcement Decree of the Act [in force 18 Sep 2026] [Presidential Decree No. 36587] — original text. Article 27(1) (15 to 34, 6 years of service, 60, disability, career break), (2) (exclusions) and (3) (industries, public bodies excluded).
- Our own working. The reductions in the table, the 2.22 million won threshold and the age-36 example are our arithmetic.
Where to check further
- Year-end settlement — year-end tax calculator.
- Exempt pay items — non-taxable pay allowances.
Written on 1 October 2026. Articles are from the National Law Information Center; the tables and examples are ours.
