The year-end tax settlement season has arrived in Korea. This process allows employees to reconcile the taxes paid throughout the year, potentially receiving a refund or paying additional taxes. By carefully reviewing deduction items, you can secure a ’13th month salary,’ but missing any items may require a cumbersome resubmission during the comprehensive income tax filing in May. To reduce such inconveniences, the National Tax Service (NTS) is actively providing guidance on easily overlooked deductions and tax reliefs.
Young employees aged 15 to 34 working at small and medium-sized enterprises can receive a 90% income tax reduction for up to five years from their employment date. Workers aged 60 and above, those with disabilities, and career-interrupted employees are eligible for a 70% income tax reduction for three years, with a maximum annual benefit of KRW 2 million. Notably, from March 14, 2025, career-interrupted men who re-enter the workforce after a break of 2 to 15 years due to marriage, childbirth, childcare, or family care will also be eligible for tax relief.
Parental leave benefits received by spouses and work scholarships earned by university student children are considered non-taxable income. If there is no other income, these spouses or children can be included as basic deduction dependents, and additional deductions for credit card use, medical expenses, education, insurance, and donations can be claimed. However, if a child is over 20 years old, some deductions may be restricted, so age requirements must be checked. Donations not previously deducted can be carried forward within 10 years, and donations made in 2021–2022 are subject to temporarily increased deduction rates.
Employees living in residential officetels or gosiwons, as well as apartments, can claim monthly rent tax credits. Those repaying housing lease loans from financial institutions are eligible for principal and interest deductions, and even in cases of renewed lease contracts or interest-only repayments, deductions are possible if requirements are met. However, interest on officetel mortgage loans is not deductible, so caution is needed. The NTS is also providing guidance on commonly missed deduction items from January 23, and employees are encouraged to use the NTS website or call center (126) for support.
This year’s tax settlement introduces expanded benefits for youth, career-interrupted workers, and renters, reflecting a more inclusive and equitable tax policy. The inclusion of career-interrupted men from 2025 marks a significant step toward gender balance and social diversity in tax benefits. With the NTS enhancing its digital guidance and error prevention services, there is growing potential for AI-driven personalized tax assistance, which could further empower taxpayers to optimize their deductions and improve financial literacy.