Major Changes in 2022 Year-End Settlement of Payroll Withholding Taxes

l 2022 additional income deduction for increased spending on credit card use

Before Revision

After Revision

n Income deductions for credit card use, etc.:

• (Eligibility) Applicable to the amount exceeding 25% of gross salary earned income

• (Deduction rate) Income deduction rate varies depending on payment method as below

Payment method	Deduction rate
Credit card use	15%
Cash receipts / debit cards	30%
Amounts spent on book purchases, performance, art museum expenses (eligible only for employees having salary earned income of KRW 70 million and less)	30%
Amounts spent in traditional markets and public transportations	40%
⑤ Increase of spending in 2021 (Compared to 2020)	10%

- Total of ① ~ ⑤

< Newly added >

(Application period)
Applicable up to December 31, 2022

n Newly added additional income deduction for increased spending on credit card use:

• Same as left

• Increased deduction rate for public transportation use in the second half of 2022 is applied

Payment method	Deduction rate
Credit card use	15%
Cash receipts / debit cards	30%
Amounts spent on book purchases, performance, art museum and theater expenses (eligible only for employees having salary earned income of KRW 70 million and less)	30%
Amounts spent in traditional markets and public transportations	40%
(July 1, 2022~Dec.31 2022., Public transportation usage)	(80%)
⑤ Increase of spending in 2022 (compared to 2021)	20%

- Total of ① ~ ⑤

• (Amount subject to deduction for increased spending)

- Attribution in 2022: 20% of ⓐ+ⓑ

ⓐ The amount of credit card spending in 2022 increased by more than 5% compared to 2021

ⓑ The amount of money spent in the traditional market in 2022 increased by more than 5% compared to 2021

• (Max deduction)

KRW 1 million per year out of the total amount of ⓐ+ⓑ

Applicable up to December 31, 2025

(Amounts spent on public transportations, portion of increased spending): Will be applied from the year-end settlement made on or after January 1, 2023.

(Amounts spent on theater expenses): Will be applied from amounts spent on or after July 1,2023.

This revised provision will be applicable for earned income incurred on or after January 1, 2023.

l Expansion of tax credit for monthly housing rent

Before Revision

After Revision

n Tax credit for monthly housing rent:

• (Eligibility) Employees having annual gross salary earned income of KRW 70 million or less (having global income of KRW 60 million or less)

• (Deduction rate)

Employees having annual gross salary of KRW 70 million or less (for employees having global income of KRW 60 million or less): 10%

Employees having annual gross salary of KRW 55 million or less (for employees having global income of KRW 45 million or less): 12%

• Max deduction: KRW 7.5 million

n Adjustment in threshold for taxpayers having global income:

• Same

• (Deduction rate)

Employees having annual gross salary of KRW 70 million or less (for employees having global income of KRW 60 million or less): 15%

Employees having annual gross salary of KRW 55 million or less (for employees having global income of KRW 45 million or less): 17%

• Same as left

This revised provision shall be applicable from the amount filed or year-end settlement made on or after January 1, 2023.

l Increasing the income deduction limit for principal and interest repayment of housing lease loans

Before Revision

After Revision

n Income deduction limit for principal and interest repayment of housing lease loans

• (Eligibility) Housing Lease Funds borrowed by the homeless class

• (Deduction rate): 40%

• (Max deduction): KRW 3 million

n Extension of the deduction limit

• Same as left

• KRW 4 million

This revised provision will be applicable from the amount filed or year-end settlement made on or after January 1, 2023.