Korea Foreign Flat Tax vs Progressive
Foreign workers in Korea can choose between a 19% flat tax (20.9% incl. local tax) and the regular progressive rates. Enter your salary to see which one costs less. (2026 tax year)
Flat Tax vs Progressive Tax
Enter your salary to see which option saves more.
What this tool does
Foreign workers in Korea can elect a 19% flat tax (20.9% including the 1.9% local income tax) on earned income instead of the regular progressive rates of 6–45%, under Article 18-2 of the Special Tax Treatment Control Act. This calculator compares both methods side by side from your gross salary, applying the earned-income deduction, personal deduction, and wage-earner credit on the progressive side. It reveals the real breakeven — which, contrary to the common '80 million won' claim, sits around 130–170 million won depending on your deductions. All inputs stay in your browser.
Who uses this
- Foreign professionals (E-7 and other work visas) deciding whether to elect the flat tax at year-end settlement
- High earners checking whether the 19% flat rate beats progressive taxation
- Families comparing — each dependent shifts the breakeven upward
- New arrivals confirming eligibility before the 2026-12-31 sunset
- HR and payroll teams advising foreign employees
How to use (4 steps)
- 1Enter your annual gross salary (before tax, including bonuses).
- 2Enter the number of dependents excluding yourself (spouse, children). Each adds a KRW 1.5M personal deduction on the progressive side.
- 3Click Compare. You will see total tax under each method, the effective rate, and how much the cheaper option saves per year.
- 4Review the progressive breakdown (taxable base, earned-income deduction, wage-earner credit) to understand why one method wins.
Formula (Special Tax Act §18-2 vs Income Tax Act §55)
Flat tax = Gross salary × 19% + local 1.9% = Gross × 20.9% (all deductions and credits waived) Progressive (resident basis): Earned-income deduction (§47, capped at KRW 20M) Personal deduction = KRW 1.5M × (1 + dependents) Taxable base = Gross − earned-income deduction − personal deduction Calculated tax = base × bracket rate − progressive deduction − Wage-earner credit (§59) + Local income tax 10% Better method = whichever total is lower. Breakeven (single filer): around KRW 137M. More dependents and more special deductions push it higher.
Real examples (single filer, 2026)
Mid income — gross KRW 50M
Flat: 50M × 20.9% = KRW 10.45M. Progressive: taxable base ~KRW 36.25M after deductions → about KRW 3.87M total. Progressive wins by a wide margin (~KRW 6.6M). At mid incomes the flat rate's loss of all deductions makes it far more expensive.
Breakeven — gross KRW 140M
Flat: KRW 29.26M. Progressive: about KRW 29.91M. Flat wins by only ~KRW 650K. This is the real crossover point for a single filer — far above the '80 million won' figure repeated in many guides.
High income — gross KRW 200M
Flat: KRW 41.8M. Progressive: about KRW 53.8M. Flat saves ~KRW 12M because it caps your rate at 20.9% while progressive reaches the 38% bracket.
Frequently asked questions
Who can use the 19% flat tax?+
Foreign workers (not Korean nationals) on earned income, electing under Special Tax Act §18-2. Employees of special-related companies are excluded. It is available whether you are a tax resident or non-resident.
Is the rate really 19%?+
The income tax is 19%, plus a local income tax of 1.9% (10% of the income tax), for an effective 20.9%. This calculator shows both lines.
Until when can I start using it?+
You must begin your first employment in Korea on or before 2026-12-31. Once you qualify, the flat tax applies for 20 years from your first work day (unless the law is extended).
Why is the breakeven so high (around KRW 130–170M)?+
The progressive method allows the earned-income deduction, personal deductions, and the wage-earner credit, which keep effective rates low. So the flat tax only wins at high salaries with few deductions — much higher than the commonly cited KRW 80M.
What do I give up by electing the flat tax?+
All exemptions, deductions, and credits are waived, and even normally non-taxable allowances become taxable. If you have large deductions (medical, education, mortgage, pension), progressive is usually better.
How do I elect the flat tax?+
Submit a flat-tax application to your employer at year-end settlement, or to the district tax office when filing your return. You may switch your election each year.
Does this include the 4 social insurances?+
No. This compares income tax plus local income tax only — not national pension, health, employment, or industrial-accident insurance. It is not your net take-home pay.
Cautions
- •Excludes the 4 social insurances and special credits (medical, education, donations, card spending) — more deductions favor progressive and raise the breakeven.
- •On the flat-tax side, employer-paid insurance and normally non-taxable allowances become taxable; this simplified model does not add them, so real flat-tax burden can be higher.
- •Resident basis. Non-residents face restricted deductions and different results.
- •Flat-tax new entry sunsets on 2026-12-31 unless extended by law.
- •Reference estimate only. Confirm with the NTS Hometax or a tax professional.
Last reviewed: 2026-06-15