The National Pension, health insurance and employment insurance premiums taken from Korean pay are deducted from income at year-end in full, with no cap. They sit in two separate provisions, though, so who qualifies differs slightly. We read Articles 51-3 and 52 of the Income Tax Act in the original.
1. National Pension contributions — the pension premium deduction. A resident with global income deducts amounts paid into public pensions from global income (Article 51-3(1)).
2. Health, employment and long-term care premiums — the special income deduction. A resident with wage income deducts the employee’s share from wage income. Daily workers are excluded (Article 52(1)).
3. Both are the full amount paid. The text sets no percentage or cap. If deductions exceed income, the excess is treated as nil.
The two deductions side by side
| Item | Pension premium deduction (Art. 51-3) | Insurance premium special deduction (Art. 52(1)) |
|---|---|---|
| Who | A resident with global income | A resident with wage income (not daily workers) |
| What | Contributions or personal charges under the public pension Acts | Premiums borne by the employee under the health insurance, employment insurance and long-term care insurance Acts |
| From | Global income amount | Wage income amount |
| How much | The premiums paid in the tax period | “That amount” paid |
| Claim | No claim requirement in the text | Applies when claimed (Article 52(8)) |
The visible difference is “who”. The pension premium deduction needs only global income, so it is open to someone with business income alone; the insurance premium deduction is for wage earners (our reading). How a business owner’s health premiums are treated is not in these two provisions, and we did not read it this time.
An example — ours
Suppose 1.8 million won of National Pension contributions and 1.5 million won of health, long-term care and employment insurance premiums came out of pay over the year. The two deductions together take 3.3 million won off income. If taxable income sits in the 15% band, tax falls by 3.3 million × 15% = 495,000 won (our arithmetic, excluding local income tax).
Employers usually apply this from payroll records at year-end, so collecting receipts is rare (this line is general practice, not statute). If you paid National Pension contributions yourself as an individually insured person during the year, it is worth checking they were not left out.
Two sentences that work like a cap
- Article 52(8) — where the deduction exceeds the resident’s aggregated global income amount, the excess is treated as nil.
- Article 51-3(3) — where personal deductions, the pension premium deduction, the reverse-mortgage interest deduction, special income deductions and income deductions under the Restriction of Special Taxation Act together exceed global income, the pension premium deduction is deemed not received up to the excess.
We read the second sentence as: when deductions are left over, the pension premium deduction is the first treated as unused. We did not check this time how that connects to tax when the pension is later drawn. Tax at the point of drawing is covered separately in tax on pension withdrawals.
Neighbouring reliefs that are easy to confuse
- Protection-type insurance — private premiums such as medical or whole-life cover are a tax credit, not an income deduction (insurance premium tax credit).
- Pension savings and IRP — pension accounts you fund yourself are also a tax credit (pension savings and IRP tax credit).
- The 130,000 won standard credit — goes to employees who make no claim for deductions under Article 52(8) and the like (wage income tax credit).
Checklist
- ☐ Does the withholding receipt show National Pension, health and employment insurance premiums?
- ☐ Any National Pension contributions paid directly between jobs?
- ☐ Check private insurance and pension savings separately under tax credits
Questions that remain
Is the employer’s half deductible too?
Article 52(1) says premiums “borne by the employee”. The employer’s share is not in that sentence.
Where does this sit in the calculation?
It comes off the wage income amount — total pay less the wage income deduction — alongside personal deductions. The whole sequence is in the year-end tax calculator.
Sources
- Income Tax Act [Act No. 21221, partially amended 23 December 2025] — original text (checked 2 October 2026). Article 51-3(1) (pension premium deduction) and (3) (deductions exceeding global income); Article 52(1) (employee-borne health, employment and long-term care premiums; daily workers excluded), (8) (claim; excess) and (10).
- Not read. The Decree’s claim procedure; treatment of a business owner’s health premiums.
- Our own example. The 1.8 million, 1.5 million, 3.3 million and 495,000 won are our example and arithmetic.
Where to check further
- The whole calculation — year-end tax calculator.
- Preparing for year-end — year-end tax settlement prep.
Written on 2 October 2026. The provisions are as published by the Korea Law Information Center; the reading and examples are ours.
