Flat 19% vs Progressive
Foreign workers in Korea get a choice most taxpayers do not: a flat 19% on employment income, or the ordinary progressive brackets. One of them will cost you less. It isn’t the same one for everyone.
The 20-year window runs from your first day of work in Korea. The flat rate is also only open to people whose first day of work falls on or before December 31, 2026.
The progressive side subtracts this. The 19% base includes it in full. So the same allowance lowers one bill and raises the other.
Pension account, donations, insurance premiums and so on. You lose all of them if you choose the flat rate.
| Progressive (기본세율) | Flat 19% (단일세율) | |
| Taxable pay (총급여액) | 51,600,000 | 54,000,000 |
| Earned-income deduction (근로소득공제) | −12,330,000 | — |
| Personal allowances | −1,500,000 | — |
| Social insurance deducted | −5,014,164 | — |
| Tax base (과세표준) | 32,755,836 | 54,000,000 |
| Computed tax (산출세액) | 3,653,375 | 10,260,000 |
| Tax credits | −660,000 | — |
| Income tax (결정세액) | 2,993,375 | 10,260,000 |
| Local income tax | 299,338 | 1,026,000 |
| Total tax for the year | 3,292,713 | 11,286,000 |
| Effective rate on gross | 6.1% | 20.9% |
Given your other answers, the two methods meet at about 178,000,000 KRW of annual gross pay (non-taxable pay included). Below that the progressive rate wins; above it the flat rate does.
An estimate on annual figures, because that is how the choice is actually made at year-end settlement (연말정산). Rates and tables as in force for tax year 2026 (Income Tax Act Art. 47, 55 and 59; Restriction of Special Taxation Act Art. 18-2), checked Aug 28, 2026. Social insurance is estimated from your pay. Nothing you enter is stored.
How it works
Because the flat-rate option has two time limits, and both count from that date. It is available only for tax periods ending within 20 years of your first day of work in Korea. And as the law stands, that first day has to fall on or before December 31, 2026. One thing to watch: the government’s 2026 tax reform bill (announced August 3, 2026) proposes extending the cutoff to December 31, 2029 while raising the flat rate from 19% to 21%. It is before the National Assembly and not yet law.
Two reasons. First, the 19% applies to your gross, including pay that would otherwise be non-taxable: the meal allowance, the car allowance, the childcare allowance. Electing the flat rate switches those exemptions off. Second, local income tax is charged on top at 10% of the income tax, so the all-in rate is 20.9%, not 19%.
Straight from the statute, in the order the law applies the steps. Start with total pay (총급여액). Subtract the earned-income deduction (근로소득공제, Income Tax Act Art. 47, capped at 20,000,000 KRW), then your personal allowances (Art. 50–51) and your social insurance. That leaves your tax base (과세표준). Apply the eight-bracket rate table (Art. 55), subtract the earned-income tax credit (근로소득세액공제, Art. 59, which has a sliding ceiling), and you have the tax due (결정세액). Local income tax adds 10% on top. We ran the National Tax Service’s own published worked example through this calculator, and it matches line by line.
No, and that is worth saying plainly. The National Tax Service explicitly declines to publish one. Its position is that whether the flat rate helps “differs from person to person” depending on your tax base and deductions. Any single figure you see elsewhere is somebody’s assumption, usually with the arithmetic left out. Ours is arithmetic from your own inputs, and the assumptions are on screen. Confirm your own case in NTS’s year-end settlement service.
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Questions people ask
Yes. Electing the flat rate switches off non-taxable treatment, deductions, reductions and tax credits all at once (Restriction of Special Taxation Act, 조세특례제한법 Art. 18-2(3)). The 200,000 KRW a month meal allowance, the car allowance, the childcare allowance and the production-worker overtime exemption all get pulled back into the 19% base. The one exemption you keep is employer-provided housing (사택).
You choose for one tax year at a time, at year-end settlement (연말정산), so it is never locked in for good. The answer moves with your salary, your dependents and your credits. Run the comparison again each year rather than assuming last year’s answer still holds. Confirm the mechanics for your own case with your employer’s payroll team or NTS.
Possibly. A qualifying foreign engineer under Art. 18 of the Restriction of Special Taxation Act (조세특례제한법) gets a 50% income-tax reduction for ten years, and you lose that reduction the moment you elect the flat rate. Where it applies, the progressive rate with the reduction comes out lower than the flat rate at any normal salary level. Few people qualify. Roughly, you have to be providing technology under an engineering transfer contract worth USD 300,000 or more, or doing research at a qualifying foreign-invested R&D facility. Check those conditions before electing anything.
No. The flat rate applies to employment income only. Severance and the national pension lump-sum refund count as retirement income, and they are taxed under a separate set of rules. Our severance and pension-refund calculators handle those.
Figures as of Aug 28, 2026. The rules and official sources are set out in the payslip and tax guide.