Korea's KRW 20 Million Financial Income Threshold: How Much More Tax You Actually Pay
Anyone with meaningful savings in Korea eventually hears the warning: once your financial income passes KRW 20 million in a year, you fall into comprehensive taxation. What almost nobody explains is how much more you would actually pay. Run the numbers and the answer surprises most people.
Interest and dividends above KRW 20,000,000 per year bring you into comprehensive taxation. Crossing the line does not automatically raise your bill. The National Tax Service calculates your liability two ways and charges the higher of the two, so if you have little other income the result is identical to the withholding you already paid. What decides the extra amount is not the size of your financial income but which marginal bracket your other income sits in.
What the threshold measures
The figure that matters is interest plus dividends received during the calendar year. Deposit interest, savings account interest, bond coupons and equity dividends all count toward the same total. It is income actually received, not the principal behind it.
Assessment is per individual. A spouse’s financial income is not added to yours. Couples are assessed separately, so concentrating funds in one name reaches the line faster while splitting them gives each person their own headroom.
Below the threshold the process is simple. The financial institution withholds tax when it pays the interest and that settles your liability. Nothing to file, nothing more to pay.
How much principal it takes to get there
At the 2026-07 disclosure, the top 12-month time deposit rate is 4.5%. Generating KRW 20,000,000 in interest alone at that rate requires roughly KRW 444,444,444 in principal.
Simple interest over twelve months. Actual requirements vary with rate, term and product structure.
On deposits alone that is a high bar. Dividends change the picture, because they fall into the same bucket. Someone with KRW 8,000,000 of deposit interest and KRW 15,000,000 of dividends is nowhere near the line on deposits but well over it in total. Add both before assuming you are safe.
What crossing the line actually costs
This is where the misunderstanding lives. The tax office computes two figures and charges whichever is larger. The first applies 14% to the first KRW 20,000,000 and adds the excess to your other income at progressive rates. The second applies 14% to all of your financial income and taxes your other income separately.
Because the higher figure wins, the bill cannot fall below what withholding already collected, and in many cases it does not rise at all. The worked examples make it concrete.
| Financial income | Other taxable income | Combined method | Separate method | Additional tax due |
|---|---|---|---|---|
| KRW 25,000,000 | None | KRW 3,100,000 | KRW 3,500,000 | No extra tax |
| KRW 30,000,000 | None | KRW 3,400,000 | KRW 4,200,000 | No extra tax |
| KRW 50,000,000 | None | KRW 6,040,000 | KRW 7,000,000 | No extra tax |
| KRW 25,000,000 | KRW 50,000,000 | KRW 10,240,000 | KRW 9,740,000 | KRW 500,000 |
| KRW 30,000,000 | KRW 50,000,000 | KRW 11,440,000 | KRW 10,440,000 | KRW 1,000,000 |
| KRW 50,000,000 | KRW 50,000,000 | KRW 16,240,000 | KRW 13,240,000 | KRW 3,000,000 |
National tax only, with deductions and credits set to zero for simplicity. A local income tax equal to 10% of the national figure is added on top. Actual liability depends on your deductions.
The first three rows have no other taxable income. Even at KRW 50,000,000 of financial income there is no additional tax. You acquire a filing obligation, but the amount payable matches what withholding already took.
The lower rows tell a different story. With KRW 50,000,000 of other income, financial income of KRW 30,000,000 produces KRW 1,000,000 in additional tax. Same financial income, entirely different outcome.
Your other income is the variable
A pattern emerges in those lower rows. The additional tax equals the amount above the threshold multiplied by the gap between your marginal rate and 14%.
With KRW 50,000,000 of other income, the combined base lands in the 24% bracket. Subtract the 14% already withheld and 10 percentage points remain. Apply that to the KRW 10,000,000 above the threshold and you get KRW 1,000,000.
| Taxable base | Rate | Progressive deduction |
|---|---|---|
| Up to KRW 14,000,000 | 6% | None |
| Over KRW 14,000,000 | 15% | KRW 1,260,000 |
| Over KRW 50,000,000 | 24% | KRW 5,760,000 |
| Over KRW 88,000,000 | 35% | KRW 15,440,000 |
| Over KRW 150,000,000 | 38% | KRW 19,940,000 |
| Over KRW 300 million | 40% | KRW 25,940,000 |
| Over KRW 500 million | 42% | KRW 35,940,000 |
| Over KRW 1000 million | 45% | KRW 65,940,000 |
Progressive rates under Article 55(1) of the Income Tax Act. Tax equals the base multiplied by the rate, less the progressive deduction.
That formula explains why identical financial income produces such different results. A retiree living mainly on interest sits in a low bracket and pays little or nothing extra. A high earner with business or employment income pays the spread on every won above the line.
Filing
Once you are in scope you file during the May global income tax season of the following year, together with your other income. If the deadline falls on a holiday it moves to the next business day; the tax office set the 2025 income year deadline at 1 June 2026.
Tax already withheld is credited against the final figure. You are not taxed twice. You settle only the shortfall, if any.
One exception is worth knowing. Financial income that was never subject to withholding, such as interest received from outside Korea, and dividends from a business partner arrangement are taxed comprehensively regardless of the threshold.
If you are close to the line
Spread receipts across years
Financial income is recognised in the year the interest is actually paid. Maturities bunched into one year concentrate the total. Staggering terms so that payments land in different years keeps any single year lower. This is only worth doing if you are near the line and in a higher bracket.
Split holdings between spouses
Separate assessment means dividing concentrated funds can keep both people below the line. What matters is who genuinely owns the funds, and transfers above certain sizes raise gift tax questions that deserve separate advice.
Do not let the threshold drive your product choice
As the table shows, with no other income there is no penalty for crossing it. Moving money into lower-yielding products to avoid comprehensive taxation usually costs more than the tax it avoids. Check your own bracket before reacting.
TIP. Your aggregate financial income can be checked through the Hometax portal. If your holdings are spread across several institutions, pulling the figure once at year end makes the following year’s planning much easier.
Frequently asked questions
Does crossing KRW 20 million in financial income mean a much bigger tax bill?
It depends entirely on your other income. With no other taxable income the result matches the withholding you already paid, so nothing extra is due. With KRW 50,000,000 of other income, financial income of KRW 30,000,000 adds KRW 1,000,000.
Is a spouse's financial income added to mine?
No. Assessment is per individual. Each spouse is measured against the threshold separately, which is why splitting holdings creates additional headroom.
How much would I need on deposit to reach the threshold?
Roughly KRW 444,444,444 at 4.5% per year, in interest alone. Dividends count toward the same total, so deposits alone are not the full picture.
When do I file?
During the May global income tax season of the following year, together with your other income. Tax already withheld is credited, so there is no double taxation.
Can I be taxed comprehensively below the threshold?
Yes. Financial income that was not subject to withholding, and dividends from a business partner arrangement, are taxed comprehensively regardless of amount.