If you’re employed in Korea, your employer withholds income tax from every paycheck and then settles the exact amount with you once a year, in January and February. This is the year-end tax settlement (연말정산). The procedure, rates and deductions are the same for foreigners as for Koreans, with a few extra options and limits.
Key facts
| Who | Everyone paid a salary in Korea, except day laborers |
| Rates | 6% to 45% progressive, plus local income tax of 10% of the tax |
| Flat-rate option | 19% (20.9% with local tax) on gross pay, no deductions |
| Settlement | Done by your employer with your February pay; refunds or extra tax come with February or March pay |
| Other income | File your own return from 1 to 31 May |
| Help | NTS call center 126; English guides at nts.go.kr/english |
How tax is taken during the year
Each month your employer withholds income tax (소득세) using a government table based on your pay and number of dependents, plus local income tax (지방소득세) of 10% of that amount. The withheld amount is only an estimate. The year-end settlement works out your real tax for the calendar year and compares the two:
- Withheld more than you owe: the difference is refunded with your pay.
- Withheld less: the difference is taken from your pay.
See how withholding fits your payslip with the salary calculator and take-home pay guide.
Resident or non-resident?
Your tax status (not your visa) decides what you can claim.
- Resident (거주자): you have a domicile in Korea or have lived here 183 days or more in the tax year. Most foreign workers with an ARC are residents. You get the full set of deductions and credits.
- Non-resident (비거주자): you’re taxed only on Korean income and can claim only a few basic deductions.
If you've lived in Korea for 5 years or less in total over the last 10 years, your foreign income is taxed in Korea only if it is paid in Korea or sent to Korea. After that, a resident is taxed on worldwide income.
The rates
| Taxable income (yearly) | Rate |
|---|---|
| Up to ₩14 million | 6% |
| ₩14M to ₩50M | 15% |
| ₩50M to ₩88M | 24% |
| ₩88M to ₩150M | 35% |
| ₩150M to ₩300M | 38% |
| ₩300M to ₩500M | 40% |
| ₩500M to ₩1 billion | 42% |
| Over ₩1 billion | 45% |
Each rate applies only to the slice of income inside that band, and only after deductions, so your effective rate is much lower. Local income tax adds 10% on top.
Flat 19% option. Foreign employees who started working in Korea by 31 December 2026 can choose a single 19% rate (20.9% with local tax) on all pay, for up to 20 years. It removes every deduction and tax-free allowance, so it usually costs more unless you earn a very high salary. The 2026 tax reform proposal (August 2026) would raise it to 21% (23.1% with local tax) for income from January 2027; this needs National Assembly approval, expected around December 2026. Compare both in the 19% flat tax guide.
Deductions and credits you can claim
As a resident on normal rates, you can claim the same items as Koreans, including:
- Dependents: a basic deduction of ₩1.5 million each for a spouse, children or parents with low income, if you can prove the relationship.
- Social insurance: your National Pension and health insurance contributions.
- Card spending: part of what you spend by credit card, debit card and cash receipts above 25% of your salary.
- Medical costs: a 15% credit on spending above 3% of your salary.
- Monthly rent: a credit of 15% or 17% of rent (salary up to ₩80 million, rent counted up to ₩10 million a year). Your ARC address must match the lease, and the lease must be in your name.
- Insurance, education and donations: credits with their own limits.
Foreigners can’t claim the deduction for housing subscription savings (주택청약저축). Credits for children and some housing items have extra conditions, so check the NTS English manual.
How the settlement works, step by step
- December to 15 January: log in to Hometax (홈택스) with a certificate issued under your ARC number and consent to your employer downloading your records (the “one-stop document service”). Or download the simplified data (간소화 자료) yourself from 15 January.
- January to February: give your employer the deduction form (소득·세액공제신고서) and any receipts not in the system, such as foreign family documents or rent contracts.
- February or March pay: refund or extra tax appears on your payslip.
- Get your withholding receipt (근로소득 원천징수영수증) from your employer. You need it for visa extensions, loans and sending savings abroad.
Special cases
- Leaving a job mid-year: your employer settles your tax with your last pay. Hand in your deduction documents before then. If you start a new job the same year, give the new employer your old receipt so they can combine both.
- Leaving Korea for good: settle with your employer before your last pay. If you have other income, file before you depart. Read the leaving Korea checklist.
- Missed deductions: you can correct them in the May filing, or later by filing a request for correction (경정청구) within 5 years.
- Freelance or side income: income from other work, rent or business must be declared in May (종합소득세 신고). Freelancers usually have 3.3% withheld; the 2026 reform proposal would cut this to 2.2% from 2027.
- Tax treaties: some treaties exempt teachers or researchers for a limited time. Check your country’s treaty and ask your employer to apply it.
Common questions
Do I have to do anything if my employer handles it?
Yes, a little. Your employer can only include deductions you give them. If you don’t consent on Hometax or hand in receipts, you’ll get only the basic deductions.
Can I claim my family back home as dependents?
Sometimes, but the rules for family living abroad are strict. You’ll need official documents proving the relationship (usually apostilled or consular-certified, with a Korean translation) and proof that you support them. Check with HR or the NTS before you claim, because a wrong claim is taken back later with a penalty.
Why did I owe money instead of getting a refund?
Usually because too little was withheld during the year, a dependent didn’t qualify, or you had two jobs. It’s not a penalty; it’s the difference between estimated and real tax.
Official sources
This guide explains the general rules as of the date above. Rules change and every case is different, so confirm with the office named here (or the 1345 Immigration Contact Center) before an important decision. Spotted something out of date? Tell us.