Korean Year-End Tax Refund Calculator

"How much will I get back this January?" The Korean year-end tax settlement (연말정산) is the country's biggest moment of payday anticipation for salaried workers. This calculator estimates your refund or additional tax payment by comparing your final tax liability against what your employer withheld throughout the year. For deep strategies and full credit details, see the complete Year-End Tax Guide.

How the Calculation Works

The refund formula is simple: "Tax Withheld − Final Tax Liability". If your employer over-withheld monthly income tax compared to your actual annual liability, you get a refund. If under-withheld, you owe more.

Step 1: Earned Income

Gross salary minus the earned income deduction (a tiered formula starting at 70% for low brackets, dropping to 2% for very high income).

Step 2: Tax Base

Earned income minus personal exemptions (1.5 million KRW per dependent) and credit card deductions.

Step 3: Computed Tax

Tax base multiplied by progressive rates: 6%, 15%, 24%, 35%, 38%, 40%, 42%, 45%.

Step 4: Final Tax

Computed tax minus tax credits (child, pension, medical, education, insurance, earned income credit).

Major Tax Credits

Credit Card Deduction

Only spending exceeding 25% of gross salary qualifies. Credit cards: 15%, debit/check cards and cash receipts: 30%, traditional markets and public transit: 40%. Cap: 3 million KRW.

Medical Expenses

15% credit on medical costs exceeding 3% of gross salary, capped at 7 million KRW (excluding fertility treatment).

Education

15% credit on tuition, child education, and self-development costs. Per-child caps apply.

Pension Savings & IRP

Combined cap of 9 million KRW (pension savings alone: 6M). 15% credit if gross salary ≤ 55M KRW, 12% above. Maxing out at 55M KRW or below yields a 1.35 million KRW refund boost.

Protective Insurance

12% credit on auto, health, life, and cancer insurance premiums, capped at 1 million KRW. Disability-specific insurance has an additional 1 million KRW cap.

Child Tax Credit

For children aged 8–20: 1 child = 150K KRW, 2 = 300K, 3+ = additional 300K each. Children under 8 receive separate parental allowance.

Practical Refund Tips

Max Out Pension Savings

If your salary is ≤55M KRW, contribute 6M to pension savings + 3M to IRP for the full 9M deduction → 1.35M KRW refund boost while building retirement assets.

Concentrate Family Medical Bills

Medical credit only applies to amounts above 3% of salary. The lower-earning spouse should pay all family medical expenses to maximize the deduction.

Use Traditional Markets and Transit

40% deduction rate vs 15% for credit cards — nearly 3× more efficient. Always pay by card to leave a deduction trail.

Frequently Asked Questions

What does a negative refund mean?

A negative result means you owe additional tax. Your final tax liability is greater than what your employer withheld throughout the year.

Why might this differ from my actual yearend settlement?

This calculator reflects 5 core deductions and personal exemptions only. Housing loans, donations, monthly rent, SME employment reduction, and other items aren't included. Use Hometax's official simulator for accuracy.

How much credit card spending should I enter?

Total annual spending across credit cards, debit cards, and cash receipts. Only the portion exceeding 25% of gross salary deducts, with a 3M KRW cap.

Should I combine pension savings and IRP?

Yes. Credit rate is 15% if salary ≤55M, 12% above. Combined cap: 9M KRW (pension savings alone: 6M).