Korean SME Employee Income Tax Relief Calculator

When a young person, someone aged 60 or over, a person with a disability or a woman returning after a career break takes a job at a small or medium-sized enterprise, most of the income tax on their wages is waived for several years. The scheme exists to steer job seekers toward SMEs rather than large companies, which is why the relief is generous. Enter the category, the computed tax before relief and the months since your first start date, and the calculator shows this year's relief, whether the cap bites and how long the relief has left to run.

The relief comes straight off the tax, so unlike an income deduction it reduces your bill won for won. But there is an annual ceiling, and the larger your computed tax the further the real relief falls below the headline rate. The calculator shows the amount cut by the cap and the effective rate separately.

Young people in their first SME job, before the year-end settlement. The relief applies only if you file an application through your employer, so not realising you qualify means losing that year. People a few years into the job should check how much of the period remains so they can factor it into any plan to move.

It matters most to those who have changed employer. If the new company is also an SME the relief continues, but the clock does not restart; it keeps counting from the start date of the job where you first claimed. Assuming a fresh five years with every move leads to the wrong answer. Someone returning to work after military service gets extra time from the date of return under a separate rule, which needs checking on its own.

The basis is 조세특례제한법 제30조제1항. A young worker gets 90% of the computed tax on earned income waived for 5 years from the start date; workers aged 60 or over, workers with a disability and women returning from a career break get 70% for 3 years. The age test for young workers excludes time spent in military service, and the range shown beside the category on screen is that test. The relief cannot exceed ₩2,000,000 in any tax year, and the scheme applies to those who start work by 31 December 2026.

The tail of the same paragraph fixes where the period starts: from the start date of the job where relief was first claimed, and it runs on regardless of job changes, re-employment or transfer of employment. The sequence is: set the rate and the total months by category; subtract the months elapsed to get what remains; if any remains, multiply the computed tax by the rate and take the smaller of that and ₩2,000,000 as the relief. Assuming the same amount each remaining year gives a rough total of what is still to come.

Say a young worker has been at an SME for 12 months and this year's computed tax on earned income is ₩1,500,000. At 90% the relief is ₩1,350,000, within the ₩2,000,000 cap, so it applies in full and the tax due falls to ₩150,000. Of the 60-month period, 48 months remain, and at the same rate each year that is roughly ₩5,400,000 more relief still to come.

If the same worker's computed tax were ₩3,000,000, 90% would be ₩2,700,000, but the ₩2,000,000 cap cuts ₩700,000 off and the relief is ₩2,000,000. Tax due is ₩1,000,000 and the effective rate drops to 66.7%. The higher the salary, the wider the gap between the headline 90% and the real relief.

The most common is believing the period restarts with a new job. The provision fixes the start at the first job, so at the second employer you get only what is left. The second is not applying. The relief is not automatic; an application goes through your employer to the tax office, and while a missed year can be recovered by an amended claim, the process is tedious.

The third is assuming every small company is a qualifying SME. The scheme restricts industries, so finance, healthcare, professional services and others are excluded whatever their size. Asking the employer is the quickest way to know. The fourth is reading the rate as a rise in take-home pay. The relief applies to income tax only and the social insurance contributions are unchanged, so your pay does not rise by 90%; your income tax falls by that share. This calculator does not apply the post-military-service extension.