About this guide
Taxpayer: resident and non-resident
Taxpayers are classified as resident or non-resident. A resident pays Korean tax on worldwide income; a non-resident only on domestic-source income.
Resident
In principle, an individual with a domicile in Korea, or a place of residence in Korea for 183 days or more. A domicile is where one's living is based, judged objectively by family sharing a livelihood, assets in Korea, and whether one holds a job here. A place of residence is somewhere one has dwelt for an extended period without the close general living relationship of a domicile. A taxpayer is deemed to have a domicile in Korea where they have an occupation normally requiring residence of 183 days or more, or family sharing a livelihood in Korea plus an occupation/assets implying such residence.
Non-resident
Any individual who is not a resident. Liable only for domestic-source income.
Types and classification of income
Taxation is either global (progressive rate on the aggregate of interest, dividend, business, wage & salary, pension and other income) or schedular (retirement income and capital gains, taxed separately). Some income within the global list is instead separately taxed — finalised by withholding at payment and not aggregated: separately-taxed interest, dividend, housing-rental (revenue ≤ 20 million won; joint return or 14% separate taxation may be chosen), pension, other income, and daily workers' wages.
Income subject to global taxation
- Financial income — interest or dividend income exceeding 20 million won a year.
- Interest income (art. 16): interest/discount on State or local-government bonds; interest/discount on bonds of domestic corporations or Korean establishments of foreign corporations; interest on deposits in Korea or abroad; profit on savings-type insurance with maturity under 10 years (premiums ≤ 200 million won); excess repayment from a workplace mutual-aid association; profit on a non-business loan.
- Dividend income (art. 17): dividends/shares of profit or surplus from domestic or foreign corporations; distributions from organizations deemed corporations; deemed dividends; amounts treated as dividends under the Corporate Tax Act; profits from collective investment schemes in Korea or abroad (excluding gains/losses on transfer or revaluation of listed/KOSDAQ securities); profits from derivative-linked securities/bonds; amounts deemed allotted under the Adjustment of International Taxes Act.
- Business income (art. 19): income from agriculture/forestry/fishing; mining; manufacturing; utilities; water/sewage/waste/recycling; construction; wholesale/retail, lodging & restaurants; transport, storage, telecommunications; finance & insurance; real estate, facility management, business-support and lease; professional/scientific/technical services; education; health & social welfare; arts/sports/leisure; associations, repair and personal services; household employment; a double-entry taxpayer's transfer of business tangible fixed assets such as vehicles (excluding real estate taxed as capital gain); and similar income from continuous, repeated for-profit activity under one's own account and responsibility.
- Wage & salary income (art. 20): salary, pay, remuneration, allowance, wage, bonus and other benefits for labour; bonuses resolved by a general meeting; amounts deemed bonus under the Corporate Tax Act; employee/faculty invention compensation; retirement-related income not classified as retirement income.
- Pension income (art. 20-3): pensions under public pension Acts (National Pension, Public Officials Pension, Military Pension, Private School Teachers & Staff Pension, Special Post Offices, and the linkage Act); retirement income withdrawn as pension that was not withheld; pension-account contributions that received a tax credit, paid as pension; growth in a pension account paid as pension; other tax-deferred amounts in a pension account; similar income paid as pension.
Other income (art. 21)
Other income is income that is not interest, dividend, business, wage & salary, pension, retirement or capital-gains income — mostly one-off, incidental amounts, including:
- Prizes, awards, rewards, service compensation and similar money/valuables
- Winnings from lottery, raffle or prize-draw tickets; profit from acts under the Act on Special Cases Concerning Regulation and Punishment; winnings of horse/bicycle/bullfighting betting-ticket buyers
- Money/goods for use of copyright by someone other than the author, performer, album producer or broadcaster; money/goods for transfer, lease or use of film, broadcast tapes or similar assets/rights
- Income from transfer or lease of mining, fishing, industrial-property, trademark and business rights (incl. store-lease rights), earth/sand/rock permits, groundwater development/use rights, etc.
- Rent for temporary lease of goods (incl. securities) or premises; up to 5 million won for renting goods/places through a mail-order broker
- Income from establishing or leasing easements/superficies for public projects (otherwise business income)
- Penalties, indemnities and interest received with a return of unjust enrichment for breach/cancellation
- Compensation or new ownership from finding lost articles or buried property; ownership of ownerless objects by possession
- Economic benefits from a related person that are not pay, dividend or gift; slot-machine winnings
- Income as original author of literary/scientific/artistic/musical/photographic works — manuscript fees, royalties, and consideration for artworks
- Brokerage fees on property rights, honoraria, lump-sum on cancelling a small-enterprise mutual-aid fund
- Payment for temporary personal services — lecturing without employment; radio/TV commentary, enlightenment or performance judging; services by lawyers, accountants, architects etc. using their expertise; other services outside employment for an allowance
- Income treated as other income under Corporate Tax Act art. 67; pension-account amounts received other than as pension; gains from exercising after retirement stock options granted before retirement, or granted outside employment; post-retirement employee-invention compensation; bribes; money from acceptance of a bribe for good offices or breach of trust; gains from transferring paintings, calligraphy and antiques; religious persons' income
Religious persons' income (art. 21(1)26)
Income a religion-related worker receives from the religious organization they belong to in connection with religious rites or activities. Religion-related workers are classified per the Korea Standard Classification of Occupations — clergy (pastors, priests, monks, Won Buddhist monks) explain and preach doctrine and perform rites; other workers (nuns, monks, preachers) assist. Religious organizations are non-profit juristic persons under the Civil Act, organizations deemed juristic persons under the Framework Act on National Taxes, or organizations with a real-estate registration number.
Taxable and non-taxable
Taxable: monthly or regular allowances such as living expenses, bonuses and incentives, and fixed amounts or the worker's expenses (utilities, medical, insurance, moving) borne by the organization — income minus non-taxable income. Non-taxable: school expenses for training as a religious worker; meals or a meal allowance up to 200,000 won/month; reimbursement of actual expenses including up to 200,000 won/month for using one's own vehicle; religious-activity expenses paid under the organization's rules/approval for ordinary religious use (non-taxable even if the income is filed as wage & salary income); disaster payments; up to 200,000 won/month for childbirth/childcare of a child aged six or younger; the benefit of employer-provided housing.
Income type, reporting and forms
Religious persons' income is other income, but is treated as wage & salary income if it is withheld as such or a finalized return is filed on that basis. A finalized return is required where no withholding or year-end settlement was done, where income came from two or more organizations without a combined settlement, or where there is other income too. Forms: Form 40(5) for religious-person income only; Form 40(1) to file it as wage & salary income or where there is other income. A return need not be filed where there is only withheld religious-person other income, or where a combined year-end settlement leaves no tax to pay.
Necessary-expense rates for religious persons' income: 80% up to 20 million won; 16,000,000 + 50% of the excess up to 40 million; 26,000,000 + 30% of the excess up to 60 million; 32,000,000 + 20% of the excess above 60 million (actual expenses count if higher).
Housing rental income
You must file a business-place status report by Feb. 10 and file/pay income tax in May if you have monthly rental income and own housing over 1.2 billion won in standard market price or housing abroad, own two or more houses, or own three or more houses with rental deposits totalling over 300 million won.
| No. of houses (incl. spouse's) | Monthly rent | Deposit |
|---|---|---|
| 1 | Not taxed (taxed if > 1.2 bn won market price or overseas) | Not taxed |
| 2 | Taxed | Not taxed |
| 3 or more | Taxed | Deemed rent taxed |
Small residence-only houses (≤ 40 m² per unit and ≤ 200 million won market price) are excluded when counting to three, until Dec. 31, 2026. If revenue is 20 million won or less, you may choose global taxation or separate taxation (housing income × 14% + other global income × progressive rate).
| Separate taxation | Registered rental housing | Unregistered |
|---|---|---|
| Necessary expense | Revenue × 60% | Revenue × 50% |
| Basic deduction (if other global income ≤ 20M won) | 4 million won | 2 million won |
| Rate | 14% | 14% |
| Tax reduction | short-term (4 yrs) 30%(20%); long-term (8/10 yrs) 75%(50%) | — |
Gross housing rental revenue = monthly rent + deemed rent on deposits. Deemed rent (three or more houses, deposits over 300 million won) = (deposits − 300 million won) × days × 60% × 1/365 × time-deposit interest rate (2025: 3.1%), less related interest/dividends. Advance rents: gross revenue = advance rent × (rental months in the year ÷ contract months). Failing to register a housing-rental business within 20 days of commencing carries a penalty of 0.2% of rental revenue, even if there is no calculated tax.
Schedular income: retirement income
Retirement income is a lump sum an employer pays on termination after a considerable service period — deferred wages accumulated during service. It also covers lump sums under public pension Acts (including non-pension-form allowances), interest on deferred retirement payments, science-and-technology development grants, construction-worker mutual-aid retirement money, and income a religious worker receives on actual retirement. Retirement income is taxed separately from global income (to avoid an excessive burden on income built up over many years), and withholding by the payer ends the obligation — a resident with only retirement income need not file a finalized return.
Non-taxable income (art. 12)
Income the tax authority does not tax for public-interest or policy reasons; no application is needed and it is excluded from the tax base. Examples:
- Income belonging to public goods; profits of a public trust
- Interest/dividends: gains on qualifying 10-year+ monthly savings insurance or permanent pension insurance, within the annual ceiling; non-taxable savings under the Restriction of Special Taxation Act — non-residents' foreign-currency time deposits (1 yr+; subscribed by 31.12.2015), youth preferential housing-subscription savings (interest up to 5M won, total 6M; by 31.12.2028), non-taxable comprehensive savings for persons 65+ / disabled / independence-merit persons (50M won; by 31.12.2028), asset-building savings (by 31.12.2015)
- Other income: veteran payments, educational subsidies and North Korean defectors' settlement money; rewards under the National Security Act
- Business income: income from letting others farm paddy/dry fields (excl. crop cultivation with revenue over 1 billion won, but grain/food-crop cultivation included); rental income of a one-house owner (excl. overseas or > 1.2 bn won houses); sideline livestock at a farm; other sideline income up to 30M won/year; traditional-liquor production outside the metropolitan area up to 12M won/year
- Wage & salary / retirement: soldiers' and mobilized persons' pay; compensation for work injuries; qualifying tuition for the worker; reimbursement-type pay (duty pay, travel, uniforms); pay of a non-Korean working for a foreign government or international organization (UN etc.) on a reciprocity basis; overseas/North Korea service pay up to 1M won/month (3M for deep-sea vessels); insurance premiums borne by the State/employer under health/employment/long-term-care insurance; overtime/night/holiday allowance up to 2.4M won/year for a production worker with monthly fixed pay ≤ 2.1M won (prior-year total salary ≤ 30M won); company meals or a meal allowance up to 200,000 won/month; up to 200,000 won/month for the worker's/spouse's childbirth or care of a child under six; employee-invention compensation up to 5M won/year
- Pension: bereaved-family and disability pensions under public pension Acts; Industrial Accident Compensation Insurance pensions
Tax-exempt income (art. 59-5)
Taxable income that is partly or fully exempted on application — unlike non-taxable income, it is included in the tax base and the exemption is granted by the government after reviewing the requirements. The exempt amount = income tax × (exempt income ÷ global income). Examples of wage & salary income eligible for exemption:
- Pay a foreigner dispatched to Korea under an inter-governmental agreement receives from either or both governments
- Income from overseas navigation of ships/aircraft operated by a non-Korean resident, where reciprocity applies
- SME-employment income-tax exemption (Restriction of Special Taxation Act art. 30): 70% (90% for young adults aged 15–34) for 3 years (5 for young adults), up to 2M won per year, also for persons 60+, disabled persons and career-interrupted women
- Foreign engineer's wage & salary income (art. 18): 50% exemption for 10 years from the first day of service in Korea (service before Dec. 31, 2026)