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Korea, Republic of Individual - Deductions

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Employment income deduction

The following amount shall be deducted from the amount of gross income in the current year to work out the adjusted gross income for salary or wage earners.

Amount of gross income (KRW thousands) Deduction rate
Over (column 1) Less than Deduction amount on column 1  Marginal deduction rate (% on excess)
0 5,000 0 70
5,000 15,000 3,500 40
15,000 45,000 7,500 15
45,000 100,000 12,000 5
100,000   14,750 2

Pension premium deduction

National pension contributions paid by a taxpayer based on National Pension Law, Veteran Pension Law, Civil Service Pension Law etc., is fully deductible.

Special tax credits/deductions

As of 1 January 2017, various special tax credits are available as below.

Tax credits for dependants

The tax credits amount to KRW 150,000 per child for up to two children and KRW 300,000 per child for the third and more. 

Tax credit for charitable contributions

The tax credit rate is 15% for the donation amount up to KRW 20 million and 30% for the excess.

Tax credit for education expenses

The tax credit rate is 15% for education expenses with certain limits (KRW 9 million for each dependant attending university or college, KRW 3 million for each dependant attending preschool to high school, no limit for the taxpayer).

Tax credit for insurance premiums

The tax credit rate is 12% for qualified insurance premiums paid for the following types of insurance (beneficiary can be either the taxpayer or the dependants who have no income for the year): life insurance, life insurance for the handicapped, damage and accident insurance, fire and burglary insurance, and insurance similar thereto. The maximum tax credit is KRW 120,000 per annum. The national health insurance and unemployment insurance premiums shall be fully tax deductible.

Tax credit for medical expenses

The tax credit rate is 15% for medical expenses paid up to KRW 7 million, but only if they exceed 3% of total employment income. However, medical expenses paid for taxpayers aged 65 or older, or the handicapped, are not subject to the KRW 7 million limit for the tax credit.

Tax credit for individual pension premium

The tax credit rate is 12% for the pension premium paid up to KRW 7 million per annum.

Mortgage interest deduction

A deduction for housing and long-term mortgage interest is available to wage earners who do not own a home, or who own only a house of a certain size, and who have subscribed to a particular savings program for home ownership.

Other deductions

There are other itemised deductions available under the Special Tax Treatment Control Law. A taxpayer also must submit supporting documents to claim the following deduction:  

  • A deduction for expenditures in traditional markets and for public transportation fares paid by credit cards, cash receipts, debit cards, or check cards up to 30%, a deduction for expenditure by debit card or check card up to 30%, and a deduction for expenditures paid by credit cards or by cash receipt usage up to 15% of such expenditures in excess of 25% of gross income (maximum limit is the lesser of 20% of the total salary income or KRW 3 million).  

Personal deductions

Korean tax law provides all resident taxpayers with the following standard personal deductions from individual taxable income.

Basic deductions

  • For the taxpayer: KRW 1.5 million per year. Non-residents of Korea are allowed to claim only the personal deduction for themselves. 
  • For a spouse who lives with the taxpayer and has an adjusted gross income of less than KRW 1 million per annum: KRW 1.5 million per year. 
  • For each eligible dependant who lives with the taxpayer and has an adjusted gross income of less than KRW 1 million per annum: KRW 1.5 million per year.

Additional deductions

  • Handicapped person in the taxpayer's household: KRW 2 million for each handicapped person. The handicapped person may be the taxpayer, spouse or other dependant. To qualify for the deductions, the spouse and/or dependant are not permitted to have an adjusted gross income in excess of KRW 1 million per annum
  • Person aged 70 or older: KRW 1 million for each taxpayer, spouse or dependant aged 70 or older in the taxpayer’s household. To qualify for this additional deduction, the spouse or other dependant should not have an adjusted gross income in excess of KRW 1 million per annum
  • Female taxpayer: KRW 500,000. To qualify for this additional deduction, the female taxpayer should be a head of household with dependants but no spouse or should be a married woman and the qualifying female taxpayer should have an annual taxable income of KRW 30 million or less (approximately KRW 40 million in total annual compensation). 
  • Single parent: KRW 1 million. To qualify for this additional deduction, the dependant is not permitted to have an adjusted gross income in excess of KRW 1 million per annum. In case a single parent claims the female taxpayer deduction above, only the single parent deduction of KRW 1 million is allowed.

Business deductions

All business-related expenses, such as moving expenses, travel expenses, automobile expenses, and certain amounts of entertainment expenses, are tax deductible. Alternatively, reimbursements for such expenses can be claimed by the business as deductible expenses and need not be included in the individual's taxable income.


Business losses excluding rental losses are deductible against employment income, pension income, other income, interest income, and dividend income in order to calculate the tax base. Unused losses can be carried forward for ten years. However, rental losses are deducible against only rental income and unused rental losses can be carried forward for ten years.

Capital losses are deductible only against capital gains. Unused losses may not be carried forward.

Last Reviewed - 17 August 2017

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