Major Changes in 2024 Year-End Settlement of Exact Payroll Withholding Taxes
l Temporary increase in tax deduction rate for large donations
|
Before |
After |
|
n Special Tax Deduction for Donations • (Deduction rate) Donations up to KRW 10 million: 15% Donations exceeding KRW 10 million: 30% |
n Special Tax Deduction for Donations • (Deduction rate) - Same
- Same
- (New) Donations exceeding KRW 30 million: 40% (applicable until December 31, 2024) |
l Non-taxable support for childcare costs and workplace daycare operation costs (Enforcement Decree of the Individual Income Tax Law, Article 17-4)
|
Before |
After |
|
n Non-taxable earned income in employee welfare/benefit nature • Provision of housing benefits for employees (other than executives/officers) • Low-interest loans for housing purchase or rental for the small and medium enterprise (“SME”) employees • Insurance premiums up to KRW 700,000 for group genuine indemnity insurance under which employees are the beneficiaries |
n Childcare costs and workplace daycare operation costs newly added • Same
• Same
• Same
• (New) Employer-funded childcare costs under the Enforcement Decree of the Infant Care Act including: - Operational costs for workplace daycare facilities - Childcare costs for regional daycare centers contracted with employers (Enforcement Decree of Infant Care Act, Article 25) |
Effective Date: Applies to income earned in tax year that includes February 29, 2024 and after.
l Extension of the special flat tax rate for foreign workers and exclusion of housing benefits from taxable income
|
Before |
After |
|
n Special income tax rate for foreign workers • Application of a flat 19% tax rate • Foreign workers may opt for the progressive income tax rates (6~45%) instead • Excludes eligibility for tax exemptions, deductions, and credits • The special flat tax rate applies for 20 years starting from the original date of domestic employment • Previous sunset deadline: December 31, 2023 |
n Extension of the application period and exclusion of housing benefits from earned income • Same • (New) Housing benefits provided to foreign workers under the flat tax rate scheme are permanently excluded from taxable income • Currently, housing benefits provided to foreign workers until December 31, 2023 are excluded • Extended sunset deadline: December 31, 2026 |
Effective Date: Applies to tax years beginning on or after January 1st, 2024.
l Extension and expansion of income tax reduction for employees in SMEs
|
Before |
After |
|
n Income tax reduction for employees in SMEs • Eligible individuals: Youth (individuals aged 15-34 at the time the employment contract was signed. For those who have completed military service, the service period (up to 6 years) is deducted from their age Seniors, persons with disabilities, women returning to the workplace • Reduction rate: 70% (90% for youth) Annual limit: KRW 2 million per tax period • Eligible industries: agriculture, fisheries, manufacturing, wholesale trade, etc. • Previous application deadline: December 31, 2023 |
n Extension of the application period and expansion of eligible industries • Eligible individuals: Same • Reduction rate: Same • Eligible industries: - (New) Computer training institutes • (New) Extended application deadline: December 31, 2026 |
Effective Date: Applies to tax year that includes February 29, 2024 and after.
l Introduction of marriage tax credit (newly added)
|
Before |
After |
|
n N/A |
n (New) Marriage tax credit • Eligible individuals: residents who have registered their marriage • Applicable year: The year of marriage registration (one-time benefit) • Tax credit amount: KRW 500,000 • Application period: For marriage registrations between 2024 and 2026 |
Effective date: Applies to individuals filing income tax returns or undergoing year-end tax settlements on or after January 1, 2025.
l Temporary increase in income tax deduction rate for credit card spending
|
Before |
After |
|
n Income tax deduction for credit card spending • Eligible amount: Expenditures exceeding 25% of total annual salary • Application deadline: December 31, 2025
|
n Additional deduction for increased spending • Eligible amount: Same • (New) For 2024, an additional income tax deduction is introduced for increased credit card spending - Eligible amount: Spending in 2024 that exceeds 5% of 2023 spending - Deduction rate: 10% of the increased amount ※ - Deduction limit: KRW 1 million • Applicable deadline: Same
|
※ Temporary income tax deduction adjustments for credit card spending (announced as part of the 2024 Chuseok Livelihood Stabilization Measures)
· For credit card spending in 2024:
o Eligible amount: Spending in 2024 that exceeds 5% of 2023 spending.
o Income tax deduction rate:
§ Current rate: 10%
§ Temporary rate: 20% (doubled for a limited period)
· For spending in traditional markets in 2024:
o Income tax deduction rate:
§ Current rate: 40%
- Temporary rate: 80% (doubled for a limited period)