Korea Income Tax Guide for Foreigners

Overview of Korean Income Tax

South Korea taxes individuals on their worldwide income if they are tax residents, or on Korean-source income only if they are non-residents. As a foreigner working in Korea, you are generally considered a tax resident if you have stayed in the country for 183 days or more during the tax year, or if you have a domicile or place of abode in Korea.

Your employer withholds income tax from your monthly paycheck using a simplified tax table (간이세액표). At the end of the year, the exact tax liability is calculated through a process called year-end settlement(연말정산, pronounced "yeonmal-jeonsan"). Any overpaid tax is refunded, and any underpaid tax is collected.

Progressive Tax Brackets (2026)

Korea uses a progressive tax system with 8 brackets. The rates below apply to taxable income (총급여 minus deductions), not gross salary. Local income tax (지방소득세) adds an additional 10% of your income tax.

The Flat 19% Tax Option (Article 18-2)

Under Article 18-2 of the Income Tax Act, foreign workers in Korea can elect to pay a flat 19% tax rate on their entire gross earned income instead of using the progressive tax brackets. This is a unique benefit available only to foreigners and was designed to attract skilled foreign talent.

Key rules of the flat tax: The 19% rate applies to your total gross salary with no deductions or credits allowed. You cannot claim personal exemptions, credit card deductions, pension contribution deductions, or any other tax benefits. Local income tax (1.9%) is added on top, making the effective rate 20.9%.

Break-even analysis: For most foreigners earning under approximately 160 million KRW per year, the progressive tax system with standard deductions will result in lower taxes than the flat 19% rate. Above that threshold, the flat rate becomes increasingly advantageous because the top progressive brackets (38%~45%) far exceed 19%. Calculate both options using our Tax Comparison Calculator to see which saves you more.

Year-End Settlement (연말정산) for Foreigners

Year-end settlement happens every January-February. Your employer collects documentation of your deductions and calculates your actual tax liability for the previous year. If you overpaid through monthly withholdings, you receive a refund in your February or March paycheck. If you underpaid, the difference is deducted.

Common Deductions Foreigners Can Claim

If you choose the progressive tax system (not the flat 19%), you are eligible for most of the same deductions as Korean citizens. Here are the key ones:

• National Pension (국민연금): Your contributions are fully deductible as income deduction.
• Health Insurance (건강보험): Premiums including long-term care are deductible.
• Credit/Debit Card Spending: Amounts exceeding 25% of your gross salary are deductible at 15% (credit) or 30% (debit/cash receipts).
• Housing Rent (월세): Up to 17% tax credit on rent payments (income threshold applies).
• Pension Savings (연금저축): Up to 6M KRW per year in tax credit contributions.
• Medical Expenses (의료비): Amounts exceeding 3% of gross salary qualify for 15% tax credit.

What you CANNOT deduct under the flat 19% tax: If you elect the flat rate, you forfeit ALL deductions and credits. No pension deduction, no card spending deduction, no housing rent credit -- nothing. The 19% applies to your full gross income. This is why the flat tax only makes sense at high income levels.

How to Choose: Decision Flowchart

Key Deadlines

Frequently Asked Questions