Korea Year-End Tax Settlement for Foreign Residents is the same process as for Korean nationals: income tax that was “roughly” withheld each month is “accurately” recalculated at year-end, and the difference is either refunded (refund) or additionally collected (additional payment). And there are exactly two key factors that determine that difference.
- Did you submit supporting documents properly (Simplified Service + missing documents)?
- Did you apply every deduction/credit you’re eligible for (income deductions · tax credits) without missing anything?
In particular, for the 2025 tax year settlement, the HomeTax Year-End Tax Settlement Simplified Service opens on January 15, 2026, and the final confirmed data will be provided starting January 20. (National Tax Service)
1) How Korea year-end tax settlement creates a “refund (your 13th-month paycheck)”
The income tax already taken out on your payslip is, in most cases, close to an “estimated amount” based on the simplified withholding tax table.
But in reality, depending on the person,
- whether you have dependents,
- whether you have medical expenses, education expenses, donations, monthly rent, or pension savings,
- how much you spent via card payments,
your final tax amount changes.
So the conclusion of year-end tax settlement can always be summarized with this formula.
Refund/Additional payment = (Tax already paid: withholding) − (Tax finalized via year-end settlement: finalized tax due)
- If the tax already paid is higher → Refund
- If the finalized tax is higher → Additional payment
2) (2025 tax year · 2026) Year-end tax settlement schedule: Remember just this
The deadline differs by company, but the “National Tax Service Simplified Data flow” is mostly fixed.
- 1/15 (Thu): Simplified Year-End Tax Settlement service opens (deduction data provided for a total of 45 categories) (National Tax Service)
- 1/20 (Tue): Final confirmed data provided reflecting additions and corrections (National Tax Service)
- After that: Worker submits documents → company settles → refund/additional payment reflected in salary (timing differs by company policy)
Tip (safe route for beginners)
If possible, submitting based on the final confirmed data after 1/20 is advantageous for reducing omissions and errors. (National Tax Service)
3) Year-end tax settlement document checklist (for beginners)
Year-end tax settlement documents “look like a lot,” but the structure is simple.
3-1. The basic 2-item set
- HomeTax Year-End Tax Settlement Simplified data (PDF/e-file)
- Income/Tax Credit Report (company form)
→ The basic method is to print/download the simplified data, attach it to the deduction report, and submit it to your company. (HomeTax)
3-2. Additional documents that “don’t appear in Simplified / are missing” (Important)
The NTS also officially states it like this.
- For data that is not provided in the Simplified Service or is missing, you must obtain it directly from the issuing institution and submit it to your company for it to be deductible. (National Tax Service)
- Examples include cases where certain data such as academy fees for preschool children, monthly rent, donation receipts, etc. may not be provided/may be missing (National Tax Service)
Also, some items within the Simplified categories may not be viewable because they are “voluntary submission (△)” data rather than mandatory submission (e.g., eyeglasses/contact lens purchase expenses). (National Tax Service)
4) Deductions in one go: Income deduction vs Tax credit
This is the part people get confused about the most in year-end tax settlement.
4-1. What is an Income Deduction?
It means reducing your tax base (the income amount used as the basis for taxation).
The NTS example structure for calculation is set up like this.
Comprehensive income tax base = Earned income amount − Personal deductions − Pension insurance premium deduction − Special income deductions − Other income deductions + (Amount exceeding the overall limit) (National Tax Service)
And the “earned income amount” itself is also calculated as,
Earned income amount = Total salary − Earned income deduction
. (National Tax Service)
✅ Why income deductions matter to beginners
→ Because income deductions lower the amount before the tax rate is applied, the perceived benefit differs depending on your income bracket.
Examples of major income deductions
- Deductions related to credit card · debit card · cash receipt spending (includes items provided in Simplified) (National Tax Service)
- Housing finance-related deductions (jeonse/lease deposit loan, long-term mortgage loan, etc.: includes items provided in Simplified) (National Tax Service)
- Home subscription savings, small business mutual aid contributions, etc. (includes items provided in Simplified) (National Tax Service)
For reference, in the Simplified Service for the 2025 tax year, fees for using swimming pools and fitness centers after 2025.7.1 will be reflected as “culture/sports spending (deduction rate 30%),” and usage-fee data for sports facilities will also be newly provided. (National Tax Service)
4-2. What is a Tax Credit?
It means subtracting directly from the calculated tax (computed tax).
In other words, even with the same KRW 100,000, it often feels more straightforward than an income deduction.
(A) Earned Income Tax Credit (an automatic “basic tax credit”)
The NTS provides the method and limit depending on the computed tax bracket. (National Tax Service)
(For beginners, it’s enough to understand this as “my tax is automatically reduced once more,” rather than doing the exact number-crunching here.)
(B) Special Tax Credits: The 4 major items beginners most often claim
The representative items that the NTS groups as “special tax credits” are as follows. (National Tax Service)
1) Insurance premium tax credit
- Protection-type insurance: up to KRW 1,000,000 per year, credit rate 12%
- Disability-exclusive protection-type insurance: up to KRW 1,000,000 per year, credit rate 15% (National Tax Service)
2) Medical expense tax credit
- Medical expenses exceeding 3% of total salary are generally eligible for the basic credit (National Tax Service)
- There are categories such as a KRW 7,000,000 annual cap for medical expenses for general basic deduction-eligible persons (credit rate 15%), etc. (National Tax Service)
- Items excluded from medical expenses (e.g., portions reimbursed by indemnity insurance) are specified, so it’s risky to assume “amount shown = all deductible.” (National Tax Service)
3) Education expense tax credit
- Tax credit of 15% of education expenses (National Tax Service)
- There are specific limits, such as KRW 3,000,000 per child per year for preschool–high school, and KRW 9,000,000 per university student per year. (National Tax Service)
4) Donation tax credit
- Generally structured as 15%, and 30% for the portion exceeding KRW 10,000,000, etc. (National Tax Service)
- Political funds/hometown donation/employee stock ownership, etc. have different application methods—be sure to distinguish the type of donation. (National Tax Service)
- For donations that the company deducts in bulk from payroll, guidance states that attaching receipts may not be necessary depending on the case. (National Tax Service)
(C) Monthly Rent Tax Credit: A 대표 item that often “increases your refund”
The monthly rent tax credit has clear conditions and paperwork, so it’s beginner-friendly.
NTS guidance criteria (summary):
- Total salary of KRW 80,000,000 or less (comprehensive income amount KRW 70,000,000 or less)
- Head of household or household member (if conditions are met) in a household without home ownership
- Credit rate: 17% if total salary is KRW 55,000,000 or less; 15% if over that up to KRW 80,000,000
- Annual limit: KRW 10,000,000
- Required documents: Resident registration record (certificate of resident registration), copy of lease contract, proof of rent payment (transfer receipt, etc.) (National Tax Service)
5) Understanding the refund structure as a “calculation flow” (Beginner diagram)
It’s hard if you try to understand year-end settlement through numbers; it’s easy if you understand it as a flow.
- Total salary (annual pay, pre-tax)
- − Earned income deduction → Earned income amount (National Tax Service)
- − (personal deductions/pension insurance premiums/special income deductions/other income deductions, etc.) → Tax base (National Tax Service)
- Tax base × tax rate → Computed tax (National Tax Service)
- − (earned income tax credit/insurance · medical · education · donation/monthly rent/pension accounts, etc.) → Finalized tax due (National Tax Service)
- Compare with tax already paid (withholding) → refund/additional payment
Example (to get a feel)
- Tax already paid via withholding during the year: KRW 4,000,000
- Finalized tax due calculated through year-end settlement: KRW 3,200,000
→ Refund of KRW 800,000
Conversely, if the finalized tax due is KRW 4,500,000 → additional payment of KRW 500,000.
6) If you’re a foreign worker, check these 3 반드시 items (real “workplace” points in Korea)
For foreigners who are employees receiving a salary from a company, the broad framework of year-end tax settlement is the same, but differences can arise in your “options” and “scope of application.” I’ll pull out only the essentials based on the NTS press release. (s.nts.go.kr)
6-1. Resident vs Non-resident
The NTS explains that if a foreign employee qualifies as a resident in Korea (has a domicile or stays 183 days or more), the deduction items and tax calculation are the same as for Korean nationals, but there may be differences in some income deductions/tax special provisions. (s.nts.go.kr)
On the other hand, for a non-resident, it clearly states that most deductions (personal exemptions, special income deductions, child tax credit, special tax credits, etc.) do not apply. (s.nts.go.kr)
6-2. Choosing the 19% flat tax is a trade-off for “giving up deductions”
Foreign employees may choose a 19% flat tax rate under certain conditions, but the NTS states that
When choosing the flat tax rate, tax-exemptions · deductions · reductions · tax credits under the Income Tax Act / Restriction of Special Taxation Act do not apply
—clearly. (s.nts.go.kr)
✅ Practical tip
- Those with many deductible items (rent, medical expenses, donations, pension savings, etc.) may find the flat tax unfavorable, while
- those with few deductions may find the flat tax simple and potentially advantageous.
→ Since it depends on your case, it’s recommended to do a side-by-side comparison at least once with your company’s payroll 담당 or a tax professional.
6-3. Check whether your company uses the “bulk provision service”
The NTS 안내 says that if a company uses the bulk provision service, the company can register a list and, with employee consent, download simplified data in bulk. (s.nts.go.kr)
→ When you’re confused about “what should I do?”, first check whether your company is using bulk provision or individual submission.
7) Top 7 common beginner mistakes
As the NTS emphasizes, Simplified data is not “automatic deductions”—it’s closer to a “collection of data.” You must verify whether you meet the deduction requirements. (National Tax Service)
- Assuming that if it appears in Simplified, it’s automatically deductible (skipping eligibility checks) (National Tax Service)
- Including personal dependent deductions even though the dependent exceeds the income requirement
- The NTS said it strengthened guidance on dependents who exceed income 기준. (National Tax Service)
- Submitting with the 1/15 open data and missing the 1/20 final confirmation updates (National Tax Service)
- Missing one of the three required documents for the monthly rent tax credit (resident registration record / lease contract / transfer proof) (National Tax Service)
- Trying to deduct medical expenses as-is, including portions reimbursed by indemnity insurance etc. (National Tax Service)
- Mixing up types of donations and misunderstanding credit rates/limits (National Tax Service)
- Thinking “it’s done, so it’s done” even though you missed deductions
- Missing items can be reflected via a request for correction (amended claim) in HomeTax, and NTS video guidance explains it’s possible within 5 years from the statutory filing deadline. (National Tax Service)
8) Foreigners’ year-end tax settlement: 3 things to do today (real practical checks)
- Download your HomeTax Simplified data as the final version after 1/20 (National Tax Service)
- Check whether you need additional documents only for items that apply to you among “rent/medical/education/donations” (National Tax Service)
- (If you’re a foreigner) Compare whether to choose the 19% flat tax, including “giving up deductions” (s.nts.go.kr)
FAQ (for search traffic · beginner question collection)
Q1. Does everyone have to do a year-end tax settlement?
In most cases, employees (wage earners) who receive salary from a company have their year-end tax settlement handled by the company. However, depending on the case (job change, mid-year resignation, multiple employers, other income, etc.), the processing method may vary.
Q2. If I submit only the “Simplified data,” is it done?
No. The NTS also explains that for data that is not provided in Simplified or is missing, you must obtain it directly from the issuing institution and submit it for it to be deductible. (National Tax Service)
Q3. Income deduction vs tax credit—what’s better?
Both are important, but they work differently.
- Income deduction: Lowers the tax base (before the tax rate is applied) (National Tax Service)
- Tax credit: Subtracted directly from the calculated tax (National Tax Service)
Q4. What documents are 반드시 required for the monthly rent tax credit?
Based on NTS guidance, you need resident registration record + a copy of the lease contract + proof of rent payment (transfer receipt, etc.). (National Tax Service)
(For foreigners, your company may request substitute documents, so check with HR.)
Q5. What if my medical expenses don’t show up in Simplified?
The NTS provides guidance on a reporting center for missing/errors in medical expenses and also announces the schedule for final confirmed data. In addition, missing data must be obtained directly from the issuing institution and submitted. (National Tax Service)
Q6. Can foreigners receive all year-end tax settlement deductions?
According to NTS guidance, foreign employees who are residents in Korea are generally calculated the same as Korean nationals, though there may be differences in some tax special provisions. Non-residents may have most deductions limited. (s.nts.go.kr)
Q7. What changes if a foreigner chooses the 19% flat tax rate?
The NTS clearly states that when choosing the flat tax rate, tax-exemptions, deductions, reductions, and tax credits do not apply. (s.nts.go.kr)
So you gain “simplicity,” but it comes with “giving up deductions.”
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