Every May, a lot of people in Korea struggle to answer one simple question: "how much comprehensive income tax will I actually owe?" If you're a freelancer who already had 3.3% withheld from every payment, it's confusing to hear you still need to file a return. If you run a small business, it's not obvious what counts as a deductible expense before tax is calculated. And if you're a salaried employee who picked up rental income or a side business, you may not realize that income has to be combined with your salary and reported separately from your regular year-end settlement. Search results only make this worse, because the numbers people quote online often assume a different income level or a different tax year than yours.
This guide walks through exactly how Korea's comprehensive income tax (종합소득세) is calculated, works through a real example using the current tax-bracket table and progressive deduction amounts, and breaks down what changes depending on whether you're a freelancer, a self-employed business owner, or an employee with outside income. At the end, you'll see how to get an estimate in seconds with an income tax calculator.
1. What Comprehensive Income Tax Is Actually Based On
Comprehensive income tax combines all income you earned in a calendar year outside of (or including certain non-wage) salary — business income, interest, dividends, pension, and other miscellaneous income — into one return filed the following May. The calculation runs through four steps.
First, you subtract necessary expenses from your gross revenue to get your taxable income amount. If you run a business, this means real costs like labor, rent, and materials; if you're a freelancer without bookkeeping, a standard expense ratio for your industry is applied instead. Second, you subtract income deductions — personal deductions, national pension contributions, and similar items — to arrive at your tax base (과세표준). Third, you multiply the tax base by the rate for its bracket and subtract the progressive deduction to get the calculated tax. Fourth, you subtract any tax credits (child tax credit, donation credit, etc.) and add any penalties to arrive at your final tax liability.
In other words, two people with the same revenue can end up owing very different amounts, because how much expense and deduction each person can claim varies. Understanding this structure is also what tells you exactly which numbers to enter into an income tax calculator.
2. The 8 Tax Brackets and How Progressive Deduction Works
Korea's comprehensive income tax uses a progressive rate structure — the more you earn, the higher the marginal rate on the top portion of your income. Here are the 2026 (tax year 2025) tax base brackets, rates, and progressive deduction amounts.
| Tax Base (KRW) | Rate | Progressive Deduction |
|---|---|---|
| Up to 14 million | 6% | None |
| 14M–50 million | 15% | 1.26 million |
| 50M–88 million | 24% | 5.76 million |
| 88M–150 million | 35% | 15.44 million |
| 150M–300 million | 38% | 19.94 million |
| 300M–500 million | 40% | 25.94 million |
| 500M–1 billion | 42% | 35.94 million |
| Over 1 billion | 45% | 65.94 million |
The formula is calculated tax = tax base × bracket rate − progressive deduction. For example, if your tax base is 30 million KRW, the first 14 million is technically taxed at 6% and the remaining 16 million at 15% — but using the progressive deduction, you can compute it in one step: "30,000,000 × 15% − 1,260,000 = 3,240,000 KRW." The progressive deduction is simply the pre-calculated difference from applying the lower brackets separately, so both methods give the same result.
3. A Worked Example: A Freelancer Earning 50 Million KRW a Year
Numbers make this much easier to follow than formulas alone, so let's walk through a freelance designer earning 50 million KRW in annual revenue.
- Gross revenue: 50,000,000 KRW
- Necessary expenses (assuming a 60% expense ratio): 30,000,000 KRW
- Taxable income (revenue − expenses): 20,000,000 KRW
- Income deductions (basic deduction, national pension, etc., assumed 3,000,000 KRW): 3,000,000 KRW
- Tax base (taxable income − deductions): 17,000,000 KRW
A tax base of 17,000,000 KRW falls into the "14M–50 million" bracket (15% rate, 1.26 million progressive deduction), so the calculated tax is 17,000,000 × 15% − 1,260,000 = 1,290,000 KRW. Applying any additional tax credits (such as the standard tax credit) can lower the final amount owed even further.
If this freelancer already had 3.3% withheld on every payment throughout the year (50,000,000 × 3.3% = 1,650,000 KRW), the May filing compares that already-paid amount against the calculated tax and either refunds the difference or requires an additional payment. Because expense ratios and deductions vary person to person, the most accurate way to check your own number is to enter your actual revenue and expected expenses into an income tax calculator.
4. From Freelancer 3.3% to Self-Employed Expense Ratios: What Changes by Income Type
Freelancers (3.3% withholding on business income) — Whoever pays a freelancer for services withholds 3.3% (3% income tax + 0.3% local income tax) before paying out the rest. This 3.3% is not a final tax — it's a prepayment. The following May, it gets reconciled against your actual calculated tax, and you either receive a refund or pay the difference. Assuming "I already paid 3.3%, so I don't need to file" is one of the most common — and costly — misunderstandings.
Self-employed business owners (simplified vs. standard expense ratio) — Small business owners who don't keep formal books estimate their necessary expenses using an industry-specific expense ratio. If your prior year's revenue was below the threshold set for your industry, the simplified expense ratio applies, allowing a generous expense deduction. Once revenue exceeds that threshold, the standard expense ratio kicks in instead — major expenses must be documented to be recognized, and only the remaining costs get a lower flat ratio. As revenue grows, more business owners fall into the standard-ratio category, which recognizes less expense and pushes the tax base — and the resulting tax — higher. The threshold and ratios for each industry code are revised periodically, so don't assume last year's classification automatically carries over; it's worth checking again at filing time. As revenue increases, keeping actual books and documenting real expenses can sometimes result in a larger deduction than the flat ratio would allow, which is worth evaluating once your business scales up.
Employees with income beyond salary — Even if you're salaried, if you earn rental income, side-business income, or other income (like lecture fees) exceeding a set annual threshold, that income must be combined with your wages and reported in the comprehensive income tax filing the following May. Year-end tax settlement (연말정산) only covers salary income — it does not automatically capture side income, which is an easy detail to overlook until a filing deadline is missed.
5. Frequently Asked Questions
Q1. I'm a freelancer and already had 3.3% withheld — do I still need to file?
Yes. The 3.3% withheld is only a provisional prepayment. You still need to file a comprehensive income tax return in May to reconcile it against your actual tax liability. Skipping the filing can trigger a failure-to-file penalty.
Q2. Can the amount from an income tax calculator differ from my actual tax bill?
Yes. A calculator is a reference tool that estimates tax based on the revenue, expenses, and deductions you enter. Your actual liability can differ depending on tax credits, exemptions, and any penalties, so confirm the precise figure through Hometax or a tax professional.
Q3. How do I know whether the simplified or standard expense ratio applies to me?
The revenue thresholds by industry code are announced annually by Korea's National Tax Service, and you can look up your own industry code on Hometax under the expense-ratio lookup menu. In general, if your prior year's revenue was below the published threshold, the simplified ratio applies.
Q4. What happens if I miss the comprehensive income tax filing deadline?
Missing the filing window (typically May 1–31) triggers a failure-to-file penalty (up to 20%) plus a late-payment penalty that accrues over time. If you can't file on time, filing late — as soon as possible — still reduces the total penalty compared to not filing at all.
6. Check Your Estimated Tax with an Income Tax Calculator
Working through tax base, brackets, and progressive deductions by hand is tedious and easy to get wrong. The income tax calculator applies the correct bracket rate and progressive deduction automatically once you enter your revenue, expenses, and deductions, so you can see an estimated tax in seconds. If you also earn salary income, the salary calculator shows your estimated take-home pay before and after tax.
If you run a business, don't forget VAT filing deadlines either — the complete guide to Korea's VAT filing periods covers preliminary and final filing dates along with late-filing penalties.
The rates and progressive deduction amounts in this article reflect the 2026 (tax year 2025) comprehensive income tax brackets. Actual tax owed can vary based on deductions, credits, and penalties, so confirm your exact figure through Hometax or a qualified tax professional.
