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South Korea tax guide 2026
South Korea's income tax climbs to 45% — 49.5% counting the 10% local surtax — but investors are treated far more gently: minority holders of listed shares pay no capital gains tax at all, crypto gains stay untaxed until at least 2027, and financial income under KRW 20 million settles at a 15.4% withholding. The heavyweight is the 10–50% inheritance and gift tax with famously modest allowances.
- Rate range
- 6% – 45% (+10% local surtax ⇒ 49.5% top)
- Key allowance
- Employment-income deduction up to KRW 20 million; KRW 1.5 million basic per family member
- Tax year
- Calendar year
- Filing deadline
- May of the following year; employees settled via January year-end settlement
Taxes covered
- Income tax49.5%
Eight brackets from 6% to 45%, plus local income tax at 10% of the bill — 49.5% all-in at the top.
- Dividend tax15.4% / scale
Financial income to KRW 20 million settles at 14% (+1.4% local) withholding; above that it joins the global scale — with a new 2026 separate regime of 14–30% for high-payout listed companies.
- Capital gains tax0% / 20–25% / scale
Minority listed-share investors pay nothing; large shareholders pay 20–25% (30% short-term); real estate runs the global scale with punitive 40–50% short-term rates.
- Crypto tax0% (until 2027)
Taxation of virtual-asset gains has been deferred repeatedly — private crypto gains are untaxed until at least 2027, when a 20% regime is slated to begin.
- Social security≈ 9.65%
Employees pay 4.75% national pension (capped), about 4% health including long-term care (high cap) and 0.9% unemployment — all deductible.
- Inheritance tax50%
Inheritance and gift tax run 10–50% above allowances that are modest by estate size — KRW 500 million standard, KRW 600 million spousal gifts.
- Withholding tax14% – 22%
Non-residents: 20% on dividends, royalties and services, 14% on most interest, 3% on business gross — all plus the 10% local surtax; treaties need advance paperwork.
Special regimes
- Listed shares tax-free
Minority investors pay 0% on gains from Korea Exchange shares — only 1%+ / KRW 5 billion 'large shareholders' are taxed.
- Crypto tax deferred
Taxation of virtual-asset gains has been postponed again — nothing is due before 2027.
- Foreign employee flat 19%
Expat employees can elect a flat 19% (20.9% with local tax) for 20 years if they start work by end-2026.
- Remittance basis for newcomers
Foreign residents in Korea 5 years or less (of the past 10) pay tax on foreign income only when remitted.
Recent changes
- 2026-01Dividend separate taxation begins for qualifying listed companies (14–30% final withholding) to reward payouts; the imputation credit rises to 10%.
- 2025-09The plan to cut the large-shareholder threshold to KRW 1 billion was scrapped — the KRW 5 billion test survives; the 'financial investment income' tax was abolished before ever starting.
- 2026-01National pension employee rate reaches 4.75% on the legislated path toward a higher combined rate; exit tax extends to foreign-company shares.