Korean Financial Income Tax Calculator

This calculator works out the tax on interest and dividends once the year's total passes the threshold for comprehensive taxation, and how much of that is genuinely extra because of the aggregation. Enter your total interest and dividends, your other global income and your income deductions, and it splits the financial income into the part up to the threshold and the part above it, computes the tax under the comprehensive method and under full separate taxation, and shows which one you actually pay.

The page exists because of a single misunderstanding. Many people believe that once financial income passes the threshold, the whole amount is taxed at progressive rates. In fact everything up to the threshold is settled by withholding, and only the excess is added to your other income. On top of that, the comparison rule means you pay the higher of two computations, so creeping just over the line does not make the tax jump. The calculator shows that structure in numbers.

Anyone whose interest and dividends from deposits, bonds and dividend stocks come to around ₩20,000,000 a year. Typical cases are a run of deposits maturing in the same year, a large holding in high-dividend stocks, or a retiree whose main income is financial. Knowing in advance whether you will need to file in May, and how much more it will cost, takes the surprise out of it.

It also helps with planning: when to schedule maturities, whether to use a separately taxed account such as an ISA, or whether to spread holdings across family members. The effect of aggregation depends heavily on the size of your other income, so comparing the result for someone with a large salary against someone with almost no other income shows which of them actually needs to act.

The basis is 소득세법 제14조제3항제6호 and 제62조. Under 제14조제3항제6호, interest and dividends totalling ₩20,000,000 or less a year are excluded from global income and taxed to a conclusion by withholding. The withholding rate under 제129조제1항 is 14%, with local income tax of 10% of the income tax on top. Anyone at or below the threshold is therefore finished with the tax already deducted and has nothing to file in May.

Above the threshold, the comparison rule in 제62조 applies. Tax is computed two ways and the higher figure is due. The first method charges 14% on financial income up to the threshold, adds only the excess to your other global income, subtracts deductions, and applies the progressive rates in 제55조제1항. The second method charges 14% on all of the financial income and taxes only the other income at progressive rates. If the first result is higher, the difference is the extra you pay because of aggregation; if the second is higher, aggregation costs you nothing. That is common when other income is small and sits in a low bracket.

The calculator first divides financial income into the part up to the threshold and the excess, computes both methods, takes the higher as income tax and adds local income tax. Tax already withheld is credited as prepaid tax in the May return, so the cash you actually pay on top is roughly the "extra from aggregation" figure plus local tax. Interest and dividends inside an ISA, income on which separate taxation has been elected, and tax-exempt products are not included in the total.

Consider someone with ₩30 million of interest and dividends, ₩50 million of other global income such as salary, and ₩1.5 million of deductions. Of the financial income, ₩20,000,000 is settled at 14% and only the ₩10 million above it is aggregated. The combined base is ₩50 million plus ₩10 million less ₩1.5 million, ₩58,500,000, which falls in the 24% bracket. The comprehensive method gives ₩11,080,000, full separate taxation gives ₩10,215,000, so the higher figure of ₩11,080,000 is the income tax, and with ₩1,108,000 of local tax the total is ₩12,188,000. The extra caused by aggregation is the gap between the two methods, ₩865,000. Had the entire ₩30 million been taxed at progressive rates, the figure would have been far larger.

With the same ₩30 million of financial income but no other income at all, the comprehensive method gives ₩3,310,000, less than the ₩4,200,000 from full separate taxation. The comparison rule takes the higher, ₩4,200,000, so the extra from aggregation is zero: a filing obligation arises, but the tax does not change. And with financial income of ₩20,010,000, only ₩10,000 is aggregated and the extra tax is ₩100. Crossing the line by a little costs almost nothing.

The most common one is fearing that passing the threshold puts all your financial income into the top bracket. Only the excess is aggregated, and even that is protected by the comparison rule, which never charges less than withholding but never lets the tax leap either. The opposite mistake also happens: skipping the May return on the grounds that withholding "already took care of it". Once you are over the threshold you must file even if no extra tax results, and failing to file brings penalties.

The second is confusion over what goes into the total. Deposit interest, bond interest, share dividends and fund distributions count; income inside an ISA, income under an elected separate taxation, and tax-exempt products do not. A spouse's and children's financial income is assessed separately for each person. The third is relaxing once the tax looks manageable. The bigger threat is usually health insurance: financial income above a certain level can cost a dependant their coverage status or raise regional contributions, often by more than the added tax. This calculator covers tax only, so check the insurance position separately.