- You are a Korean tax resident if you have a Korean domicile or stay 183 days or more; residents are taxed on Korean income and, in their first five years, on foreign income paid in or remitted to Korea.
- National rates run from 6% to 45%; local income tax adds 10% of the tax, so 6.6% to 49.5% in total.
- Foreign employees can elect a flat 19% (20.9% with local tax) on gross salary for twenty years from first working in Korea, if they start by 31 December 2026; no deductions apply.
- The 2026 tax reform bill would raise the flat rate to 21% for income from 2027 and extend eligibility to those starting work by 2029.
- Ignoring other credits, the flat rate starts to win at roughly KRW 160–170 million of salary for a single person; below that, progressive rates usually do.
- Employers settle the year in February; salary paid from abroad must be reported by the employee, by 31 May at the latest.
Residence: who Korea taxes, and on what
Under Article 1-2 of the Income Tax Act, a resident (거주자, geojuja) is an individual with a domicile (주소, juso) in Korea or a residence (거소, geoso) of 183 days or more in the tax year. Domicile is a facts test — family, assets and work in Korea — so an employee who moves with a long-term contract and family is resident from arrival, not from day 183. Everyone else is a non-resident (비거주자, bigeojuja), taxed only on Korean-source income.
Residents are taxed on worldwide income, but Article 3 gives foreigners a valuable relief: until a foreign resident has lived in Korea for more than five years in the last ten, income from sources outside Korea is taxed only if it is paid in Korea or remitted to Korea. Rental income from a flat at home, dividends on a foreign brokerage account or interest left abroad stay outside Korean tax in those years; transfer them to a Korean account and they come in. From year six, worldwide income is taxable, with a foreign tax credit (외국납부세액공제, oeguk napbu seaek gongje) for tax paid abroad. Salary for work done in Korea is Korean-source wherever it is paid.
The rates
| Taxable income (KRW) | National rate | With local income tax |
|---|---|---|
| Up to 14 million | 6% | 6.6% |
| 14–50 million | 15% | 16.5% |
| 50–88 million | 24% | 26.4% |
| 88–150 million | 35% | 38.5% |
| 150–300 million | 38% | 41.8% |
| 300–500 million | 40% | 44% |
| 500 million – 1 billion | 42% | 46.2% |
| Over 1 billion | 45% | 49.5% |
Income Tax Act Article 55; marginal rates on taxable income after deductions.
The rates apply to taxable income (과세표준, gwase pyojun) — gross employment income minus non-taxable items, the earned income deduction (근로소득공제, geullo sodeuk gongje) and personal deductions — and the result is reduced by tax credits. The earned income deduction under Article 47 is generous at the bottom and small at the top: 70% of the first KRW 5 million, falling in steps to 2% above KRW 100 million, capped at KRW 20 million. Each person claimed — yourself, a spouse with little income, children, qualifying parents — gives a KRW 1.5 million personal deduction (인적공제, injeok gongje); employee social insurance contributions are deductible too.
Deductions and credits that matter to expatriates
| Item | How it works | Watch out for |
|---|---|---|
| Earned income tax credit | 55% of tax up to KRW 1.3 million, then 30%, capped by salary band | Cap falls to KRW 200,000–500,000 for high earners |
| Child credit | Fixed credit per child, rising with the number of children | Children must be dependants; documents for children abroad |
| Pension account and IRP credit | 12–15% of contributions within an annual limit | Contributions by 31 December |
| Insurance premium credit | 12% of qualifying premiums up to KRW 1 million | Korean insurers |
| Medical expenses | 15% of costs above 3% of salary | Receipts outside Hometax |
| Education | 15% for qualifying fees, including children’s schooling | International school fees are limited |
| Donations | 15% (30% above a threshold) for qualifying donations | Receipts from qualifying bodies |
| Monthly rent credit | 15–17% of rent for employees within the income limit, up to a cap | Lease must be in your name and registered |
| Card spending deduction | 15–40% of spending above 25% of salary, capped | Rarely large for high earners |
Simplified; figures and limits change with annual tax law amendments.
Expatriate packages raise their own questions. Housing allowances, school fees for children, home-leave flights and tax equalisation payments are generally taxable salary; company-provided housing can be non-taxable for ordinary employees but not for executives or substantial shareholders in many cases. A meal allowance of up to KRW 200,000 a month and certain other items are non-taxable under the progressive system — but not under the flat rate, which taxes gross pay.
The flat rate: 19% today, 21% proposed
Under Article 18-2 of the Restriction of Special Taxation Act, a foreign employee can elect to pay income tax at a flat 19% — 20.9% with local income tax — on total employment income instead of the progressive rates. The election is made year by year, through the employer at year-end settlement or in the May return, by submitting the flat-rate application (단일세율 적용신청서, dani seyul jeogyong sincheongseo). It is available for tax years within twenty years of the first day the person worked in Korea, for those who start work in Korea by 31 December 2026; leaving and returning does not reset the clock. The Supreme Court confirmed in June 2026 that the twenty-year rule, introduced from 2023, does not apply retroactively to earlier years.
The flat rate applies to gross (총급여) employment income, including items that would otherwise be non-taxable, and with no deductions or credits at all — no personal deductions, no rent credit, no child credit, no pension credit. It suits highly paid expatriates with few deductions; it rarely suits a family with children, a mid-level salary or significant non-taxable allowances. Employees can switch back to progressive rates in a later year.
The government’s 2026 tax reform bill, approved by the cabinet on 1 September 2026 and sent to the National Assembly two days later, would raise the flat rate to 21% — 23.1% with local income tax — for income arising from 1 January 2027, and extend eligibility to foreigners who first start work in Korea by 31 December 2029. The Assembly normally votes on the tax bills in December; the figures may change, and it is not yet clear how the higher rate will apply to people already using the regime. The same bill would narrow the separate 50% income tax reduction for foreign engineers and researchers to doctorate holders at qualifying technology companies, for contracts signed from April 2027.
Using the calculator’s assumptions — a single employee with KRW 2.4 million of non-taxable allowances, social insurance and the standard credits only — the progressive system wins up to roughly KRW 160–170 million of salary at 19%, and up to about KRW 185–195 million at the proposed 21%. Above that, the flat rate saves money. Every additional deduction — children, rent, pension contributions — pushes the break-even higher. Model both each year; the right answer changes with salary, family and the law. Employers can also adjust monthly withholding — the employee can choose 80%, 100% or 120% of the table amount — so a large refund or bill in February is a choice, not an accident.
| Annual gross salary | Progressive (single, no extra credits) | Flat 19% incl. local | Flat 21% incl. local |
|---|---|---|---|
| KRW 60 million | about KRW 4.0 million | KRW 12.5 million | KRW 13.9 million |
| KRW 90 million | about KRW 9.8 million | KRW 18.8 million | KRW 20.8 million |
| KRW 200 million (pension-exempt) | about KRW 48.6 million | KRW 41.8 million | KRW 46.2 million |
Indicative, using the calculator’s simplified model; actual results depend on full deductions and credits.
Year-end settlement
Employees on Korean payroll pay income tax monthly through withholding (원천징수, woncheon jingsu) based on the National Tax Service’s simplified table, and the year is squared in the year-end settlement (연말정산, yeonmal jeongsan) under Article 137 of the Income Tax Act. From mid-January, the Hometax simplified service (연말정산 간소화 서비스) provides most data — insurance, medical, education, card spending, pension contributions. The employee adds what is missing — rent, dependants abroad, donations, foreign tax — and tells the employer whether to apply the flat rate. The employer calculates the final tax; the refund or additional tax arrives in the February payslip, and the employer files the statements with the tax office by 10 March.
Missed deductions can be claimed later in a May return or by a correction claim within five years. An employee who leaves mid-year is settled by the employer in the final pay; anyone with other income — rental, investment, freelance — files a comprehensive income tax (종합소득세, jonghap sodeukse) return by 31 May for the previous year.
- December: decide flat or progressive; make pension-account contributions; register the lease.
- Mid-January: download Hometax data; gather missing receipts and family documents.
- Late January: submit to HR, with the flat-rate application if electing it.
- February: refund or additional tax in pay.
- By 31 May: file a comprehensive return if you have other income or missed deductions.
Salary paid from abroad and self-employment
Salary for work in Korea paid by a foreign employer that has no Korean payroll is class B employment income (을종 근로소득, euljong geullo sodeuk). No one withholds it, so the employee either joins a taxpayers’ association (납세조합, napse johap) that withholds monthly — with a small tax credit for doing so — or files a comprehensive return by 31 May and pays the tax then. Seconded employees whose salary is recharged to a Korean subsidiary are often put on Korean payroll for simplicity. Digital nomads should read the F-1-D guide on how this applies to them.
Freelancers and the self-employed report business income in the May return, deducting expenses; Korean clients usually withhold 3.3% from fees as a prepayment. Social insurance follows separately; see Korean tax on creators and overseas income for a worked example of foreign-source business income.
Non-residents and short assignments
A non-resident employee working in Korea is taxed on Korean employment income, usually by withholding at the same rates. Tax treaties often exempt short assignments: under the dependent personal services article, a resident of the treaty country who is in Korea for no more than 183 days in the relevant period, paid by an employer that is not Korean and whose salary is not borne by a Korean permanent establishment, is taxed only at home. The exact wording — calendar year or any twelve months — differs by treaty. Recharging the salary to a Korean subsidiary can remove the exemption.
Double taxation and the home country
Moving to Korea rarely ends tax at home on the first day. Many countries keep taxing a departing resident until ties are cut, and some — the United States above all — tax citizens wherever they live. Korea has tax treaties with about ninety countries. Where both countries treat a person as resident, the treaty’s tie-breaker — permanent home, centre of vital interests, habitual abode, nationality — decides which country has the primary right; the other gives relief, usually by credit. Korean tax paid on Korean salary is normally creditable at home, and foreign tax on foreign income is creditable in Korea within limits.
Two practical steps help. Obtain a Korean certificate of residence (거주자증명서, geojuja jeungmyeongseo) from the tax office when your home country or a foreign payer asks for proof, and keep a record of days in and out of Korea — immigration records can be downloaded — because residence disputes are decided on facts. Executives who keep a home and family abroad while working in Korea should take advice before the first year ends.
Social insurance and tax together
Income tax is only part of the deduction from a Korean payslip. Employees also pay national pension (4.75% up to the ceiling), health insurance (3.595% plus long-term care) and employment insurance (0.9%) unless exempt — about 9.7% of pay in total, before tax. Under progressive rates those contributions are deductible; under the flat rate they are not. Foreign employees covered by a social security agreement with a certificate of coverage pay no Korean pension, which changes both the payslip and the comparison between the two tax methods. See Korean social insurance in 2026 for the full calculation.
Leaving Korea
Before leaving permanently, ask the employer for the mid-year settlement in the final pay, and file a return for any other income. A foreign employee who has contributed to the National Pension may claim a lump-sum refund if their country is eligible; see Korean social insurance. Severance pay is taxed separately at favourable rates. If you keep Korean assets or income after departure, you become a non-resident taxed on Korean-source income only; tell your bank and brokers to apply non-resident withholding and treaty rates.
In Korea the tax return is mostly your employer’s job. The choice between the flat rate and the brackets is yours — and it is worth an hour every December.
Voixa Korea
Two worked examples
A family on a mid-level salary. Daniel, a Canadian engineer, earns KRW 90 million in Seoul with a spouse and two children, rents a flat and contributes to an IRP account. Under progressive rates his deductions for three dependants, the child credits, the rent and pension credits and the earned income credit bring his tax well below KRW 10 million including local tax; the flat rate would cost about KRW 18.8 million. He stays on progressive rates and claims every credit at year-end settlement.
A senior executive. Claire, a French regional director, earns KRW 260 million plus housing paid by the company, has no dependants in Korea and is exempt from the Korean pension under the Korea–France agreement. Progressive tax with few deductions would be well above the flat amount; the flat 19% on her gross package — including the taxable housing allowance — is cheaper, so she elects it at year-end settlement and will re-run the comparison in 2027 if the 21% rate is enacted. Her French rental income stays outside Korean tax while she leaves it in France during her first five years of residence.
Mistakes we see
- Electing the flat rate on a mid-level salary with dependants.
- Forgetting that the flat base includes allowances and housing.
- Remitting foreign rental or investment income to a Korean account without realising it becomes taxable.
- Not reporting salary paid from abroad as class B income.
- Unregistered leases that lose the rent credit.
- Leaving Korea without a final settlement or return.
- Assuming 183 days decides everything when a Korean domicile makes you resident from day one.
Korean terms you will meet
Questions readers ask
What are the income tax rates in Korea for 2026?
6% to 45% on taxable income, in eight brackets, plus local income tax of 10% of the tax — 6.6% to 49.5% in total.
What is the 19% flat tax for foreigners in Korea?
An election for foreign employees to pay 19% (20.9% with local tax) on gross employment income, with no deductions, for up to twenty years from first working in Korea, for those starting by 31 December 2026.
Is the flat rate going up?
The 2026 tax reform bill proposes 21% (23.1% with local tax) for income from 2027 and extends eligibility to those starting work by 2029; the National Assembly decides in December.
When is the flat rate better than progressive rates?
For a single person with few deductions, from roughly KRW 160–170 million of salary at 19%; with dependants and credits, higher.
Am I a Korean tax resident?
If you have a Korean domicile or stay 183 days or more in the year. Residents in their first five years are taxed on foreign income only if it is paid in or remitted to Korea.
How does year-end settlement work?
Your employer collects your deduction documents in January, recalculates the year’s tax and pays the refund or collects the balance in February’s salary.
Do I have to file a tax return in Korea?
Not if your only income is Korean payroll salary. You file by 31 May if you have salary paid from abroad, business, rental or investment income, or missed deductions.
- Acclime — Personal income tax in South Korea (October 2026)
- Seoulstart — Flat tax election guide (2026)
- KPMG Korea — Tax brief, July 2026
- Bae, Kim & Lee — 2026 tax reform: international tax items
- Kim & Chang via Law Times — 2026 tax reform highlights
- Income Tax Act (소득세법)
- Restriction of Special Taxation Act (조세특례제한법)
Alexander Baranov
Founder of the BCA Group · cross-border corporate and tax adviser since 2008
Alexander advises foreign founders and groups on company formation, tax structuring and corporate law in more than 40 jurisdictions across Europe, the Gulf, Asia and Latin America. He is the author of nine books on international business and tax and writes regularly for professional finance and tax journals. He works in English, German, Spanish and Russian.
This guide is based on the Korean statutes cited in the text and on our own filings. It is reviewed when the law or official rates change.