Year-end Settlement and Declaration of Payroll Withholding Taxes for 2025 (due filing by March 10, 2026)

The employer as a tax withholding agent must perform the year-end settlement of exact payroll withholding taxes for and on behalf of its employees in February of the following year after each year end as required by the Individual Income Tax Law (IITL) of Korea.

The employer should reflect the results of year-end settlement in the February payroll of the following year. Any overpayment resulting from the year-end settlement is applied to offset payroll taxes due in February of the following year and subsequent months until fully utilized. For any underpayment identified through the year-end settlement, the employer should withhold additionally from the February payroll and remit it to the tax office as scheduled by March 10 of the following year (i.e., by March 10, 2026 for year 2025).

For year-end settlement purposes, the employees should gather and submit supporting documents to claim tax deductions and credits.

Through the year-end settlement and filing process, employees having only salary income may satisfy their annual individual income tax reporting obligations in Korea. On the other hand, employees who have other source of income exceeding certain thresholds, in addition to salary income, are required to file an annual individual income tax return (“종합소득세신고” in Korean) together with tax payment on or before May 31 of the following year (i.e., by June 1, 2026 for 2025 income).