Korean ISA Tax Saving Calculator

An ISA (Individual Savings Account) is a single account that holds deposits, funds, ETFs and shares together. The question this calculator answers is how much less tax you pay running those products inside an ISA than in an ordinary brokerage or bank account. Choose the account type, enter the gains and the losses inside the account in units of ₩10,000, and you get the tax due inside the ISA, the tax you would have paid in an ordinary account, and the difference.

The difference is split into two parts rather than shown as one number. One part is what you save because losses are subtracted from gains; the other is what you save from the tax-free allowance and the lower rate. Which part is bigger depends on how you invest. Someone who only holds deposits gets the rate saving alone, while someone running several funds where some lost money often finds the loss-offset saving is the larger of the two.

Anyone deciding whether to open an ISA at all. A bank will describe it as "tax-free", but seeing whether that means tens of thousands of won or hundreds of thousands at your scale of investing makes the decision concrete. People who already hold one use it as maturity approaches: enter the gains and losses as they stand and you see the tax that will be settled, which helps decide whether to extend, close, or roll the balance into a pension account.

It is also for people unsure which type they qualify for. If your gross salary in the previous tax period was ₩50 million or less, or your global income was ₩38 million or less, you are in the lower-income type, as are farmers and fishers. Switching between the two types shows exactly what the larger allowance is worth in won.

The rule is 조세특례제한법 제91조의18. 제1항 taxes gains above the allowance separately at 9%, and 제2항 sets the tax-free allowance at ₩4 million for the lower-income and farming/fishing type and ₩2 million for the standard type. 제5항 says gains and losses are netted as at the date the contract ends. The comparison side, an ordinary account, uses the withholding rate of 14% in 소득세법 제129조, plus local income tax at 10% of the income tax, giving 15.4% in total. Adding local income tax to the ISA's 9% in the same way gives 9.9%.

There are four steps. First, subtract losses from gains to get the net gain. Second, set aside the net gain up to the allowance as tax-free. Third, multiply whatever exceeds the allowance by 9.9% to get the ISA tax. Fourth, the ordinary-account tax ignores losses entirely and multiplies the whole gain by 15.4%. The gap between the two is your saving. The loss-offset share is found by asking what the ISA tax would have been had losses not been subtracted, and comparing that with the actual ISA tax; the remainder is the rate share.

Contributions are capped at ₩100 million over the life of the account, with a separate annual cap. Since this calculator takes gains and losses that have already occurred, the contribution caps do not enter the calculation.

Say a standard-type account shows ₩8 million of gains and ₩3 million of losses. The net gain is ₩5 million. Of that, ₩2 million is tax-free, and the remaining ₩3 million at 9.9% gives an ISA tax of ₩297,000. The same trades in an ordinary account would ignore the ₩3 million loss and tax the full ₩8 million gain at 15.4%, which is ₩1,232,000. The saving is ₩935,000.

Breaking that ₩935,000 down: ₩297,000 comes from subtracting the ₩3 million loss, and ₩638,000 from the allowance and the lower rate. Put the same figures into the lower-income type and the allowance rises to ₩4 million, the taxed portion shrinks to ₩1 million, the ISA tax falls to ₩99,000 and the saving grows to ₩1,133,000.

Leaving losses out is the most common. Enter gains alone and the loss-offset share shows as zero, which throws away half of what an ISA does. Every loss realised by selling inside the account should go in. The opposite error is entering unrealised paper losses: netting is done on the gains and losses that are fixed at the closing date.

Another frequent misreading is that the allowance is "₩2 million per year". It applies once, to the net gain over the whole life of the account. Whether closing and reopening every year beats holding for the long run therefore depends on the size of your gains. Closing before the minimum holding period claws back the tax you saved, so if you know you will need the money, start the arithmetic from that date. Finally, this calculator does not cover gains that are untaxed even in an ordinary account, such as capital gains on listed Korean shares or domestic equity funds; if those make up most of your holdings, the real saving is smaller than the figure shown here.