Taxes in South Korea

Understanding Korean taxes is essential for financial planning. The system offers some benefits for foreign workers.

Tax Residency

You become a Korean tax resident if:

You stay 183+ days in a calendar year
You have a domicile requiring 183+ days stay
You're employed in Korea

Tax residents: Pay tax on worldwide income

Non-residents: Pay tax only on Korean-source income

Income Tax Rates (Progressive)

Taxable Income (KRW)	Rate
Up to ₩14 million	6%
₩14M - ₩50M	15%
₩50M - ₩88M	24%
₩88M - ₩150M	35%
₩150M - ₩300M	38%
₩300M - ₩500M	40%
₩500M - ₩1B	42%
Over ₩1B	45%

Plus: Local income tax of 10% of national tax (effectively adds ~1-4.5% to effective rate).

Flat Tax Option for Expats

20.9% flat rate (19% national + 1.9% local) available for foreign employees who:

Started working in Korea by December 31, 2026
Are in their first 5 years of employment

When beneficial: If earning more than ~₩130 million annually

Trade-off: Cannot claim deductions (family, credit card, insurance, housing, etc.)

Calculate which is better before choosing.

Special Tax Incentives

For qualified foreign engineers/technicians:

50% income tax reduction for 10 years
Must provide services to Korean entity

For raw materials/parts/equipment workers:

70% reduction for first 3 years
50% reduction for next 2 years

Standard Deductions

If using progressive rates (not flat tax):

Personal exemption: ₩1.5 million per person
Dependent deductions
Credit card spending deduction
Insurance premium deductions
Medical expenses
Education expenses
Housing-related deductions

Filing and Payment

Tax Year: Calendar year (January 1 - December 31)

Filing Deadline: May 31 of following year (for individuals)

Employer Withholding: Monthly from salary

Employees: Employer handles withholding and year-end adjustment

Self-employed/Freelance: Must file independently

Social Security

Mandatory contributions (employee share):

National Pension: 4.5% of salary
Health Insurance: ~3.5% of salary
Employment Insurance: 0.9% of salary
Long-term Care Insurance: 0.4% of salary

Total: ~9-10% employee contribution

Tax Treaties

Korea has tax treaties with 90+ countries to prevent double taxation. Check if your home country has a treaty.

For US citizens: FEIE (Foreign Earned Income Exclusion) and Foreign Tax Credit available but you still file US taxes.

Pro Tips

•Calculate whether flat 20.9% or progressive rates with deductions is better for you
•Flat rate is typically better if earning over ~₩130 million
•183-day rule determines tax residency - track your days
•Year-end tax adjustment done by employer in January/February
•Keep receipts - credit card spending is tax-deductible under progressive rates

Taxes