Starting next year, the South Korean government will expand the non-taxable limit for childbirth and childcare expenses from 200,000 KRW per month to 200,000 KRW per child per month. It will also include extracurricular education expenses for children under elementary school second grade or under 9 years old in the education expense tax deduction. In addition, liquid-type e-cigarettes will be regulated as tobacco products, and a regional doctor system with service-based and contract-based models will be introduced.
Under the revised Income Tax Act, the non-taxable limit for childbirth and childcare benefits will be expanded to 200,000 KRW per child per month. Expenses for extracurricular activities for children under elementary school second grade or under 9 years old will also be eligible for education expense tax deductions. These changes apply to income earned after January 1, 2025. The corporate tax rates will also be adjusted: 10% for taxable income up to 200 million KRW, 20% for income between 200 million KRW and 20 billion KRW, 22% for income between 20 billion KRW and 300 billion KRW, and 25% for income exceeding 300 billion KRW.
The Special Taxation Restriction Act includes provisions for separate taxation of dividend income. Dividends received from high-dividend companies that meet certain criteria will be taxed separately at rates ranging from 14% to 30%, rather than being included in comprehensive income tax. Additionally, spouses living separately from the household head will now be eligible for rent tax deductions. For individuals with total salaries under 70 million KRW, the basic deduction limit for credit card usage will be raised to up to 1 million KRW for dependents, including children and grandchildren.
Under the revised Tobacco Business Act, liquid-type e-cigarettes will now be classified as tobacco products, subjecting them to advertising restrictions and online sales bans, effective April 2025. In the medical sector, a regional doctor system will be introduced to address regional imbalances in medical personnel. The service-based model will provide financial support to selected medical students in exchange for 10 years of mandatory service, while the contract-based model will require specialists to work in designated regions for 5 to 10 years. These changes take effect in February 2025.