Year-end tax settlement settles the difference between "tax paid in advance" and "actual tax"
Your company withholds income tax each month by the simplified withholding table. That's an approximation, so in January–February of the next year, a full year of deductions is reflected to recalculate the tax you actually owe (determined tax). If it's less than what you paid in advance, you get a refund; if more, you pay the difference.
Calculation steps
- Income deductions: gross pay − earned income deduction − personal deduction (₩1.5M per person) − national pension − health & employment insurance − credit cards etc. = tax base
- Apply rates: tax base × basic rates (6–45%) = computed tax
- Tax credits: computed tax − earned income tax credit − children − pension accounts − insurance · medical · education · rent = determined tax
Deduction rates at a glance
| Item | Deduction type | Rate · limit |
|---|---|---|
| Credit card | Income deduction on spending above 25% of gross pay | 15% (limit ₩3M; ₩2.5M above ₩70M gross pay) |
| Debit cards · cash receipts | 〃 | 30% |
| Pension savings · IRP | Tax credit | 15% (12% above ₩55M gross pay), ₩9M limit |
| Monthly rent | Tax credit (homeless household head, gross pay ₩80M or less) | 17% (15% above ₩55M), ₩10M limit |
| Medical expenses | Tax credit on amounts above 3% of gross pay | 15% |
| Protection-type insurance premiums | Tax credit | 12%, ₩1M limit |
| Children (ages 8–20) | Tax credit | ₩250K for 1, ₩550K for 2, plus ₩400K for each from the 3rd |
Schedule
The NTS year-end settlement simplified service usually opens on January 15; after you submit documents to your company, the refund comes with your February (or March) pay. Missed deductions can be claimed back within 5 years with a request for correction.
This calculator gives estimates based on published laws and criteria and is not legal or tax advice. Always check on Hometax before actually filing.
FAQ
Where can I see the income tax I've already paid?
Add up a year of the "Income tax" line on your pay slips, or check Hometax > payment statement lookup. Leave it blank and it's estimated from the simplified withholding table.
Which spouse should dual-income couples put deductions on?
Card and medical deductions have thresholds (25% · 3% of gross pay) that the lower earner passes more easily, while personal and child deductions often favor the higher earner with the higher tax rate.
Why is my refund ₩0 or why do I owe more?
Often because deductions are few, you chose to have only 80% withheld monthly, or you changed jobs mid-year and your previous employer's income wasn't combined.