Korean Medical, Education & Insurance Credit Calculator

What Korean year-end settlement calls the "special tax credits" are three items: protection-type insurance premiums, medical costs and education costs. All three are credits rather than deductions, meaning they come straight off the tax computed rather than off your income, so the credit amount is exactly what your tax bill falls by. Enter your gross salary and what you spent on each item, and this calculator shows the credit for each, the total, the part of your medical spending that earns nothing because of the threshold, and the part of your education spending that is lost to the ceilings.

The three items work differently. Insurance is simple: cap the premiums, multiply by the rate. Medical costs only start to count above a fixed share of your salary, and whether they are capped depends on whose treatment you paid for. Education costs are capped per child, and the ceiling grows with the number of children. Without knowing those differences it is easy to wonder why heavy spending produced so small a credit.

Salaried employees checking, ahead of year-end settlement, how much of this year's hospital bills, premiums and tuition will come back as tax. It matters most in an unusual year: a large hospital bill for a parent, a child starting university, or a course of fertility treatment all change the result sharply, so that is when it is worth running the numbers.

Dual-income couples also use it to decide which spouse should claim the medical costs. The medical threshold is a percentage of gross salary, so the lower earner has the lower threshold and the same bills yield a larger credit. Entering each spouse's salary in turn shows immediately which side comes out ahead. One caveat: a credit can only offset that person's own computed tax, so piling everything onto the spouse who owes little tax can leave part of the credit unused.

The rule is 소득세법 제59조의4. Insurance falls under paragraph 1: protection-type premiums are credited at 12% and disability-only cover at 15%, each recognised up to ₩1,000,000 a year. Savings-type policies do not count. Medical costs fall under paragraph 2. The calculator first works out the threshold, 3% of gross salary. Whatever you spent above that threshold is eligible, and it is credited at 15% for ordinary medical costs and 30% for fertility treatment. The threshold is taken out of ordinary medical costs first; if they are not enough to absorb it, the rest comes out of costs for yourself, people over 65 and people with disabilities, and then out of fertility treatment.

Ordinary medical costs are recognised only up to ₩7,000,000, but costs for yourself, for anyone aged 65 or over, for people with disabilities and for those with serious illness have no ceiling, which is why the calculator takes them in a separate box. Education falls under paragraph 3: tuition is recognised up to ₩9,000,000 per university student and ₩3,000,000 per school or pre-school child, then credited at 15%. Entering the number of children raises the ceiling accordingly. The three credits added together are the special tax credit total, which can never exceed the tax computed.

The calculator's defaults are a gross salary of ₩50,000,000, ₩1,000,000 of protection-type premiums, ₩3,000,000 of ordinary medical costs, ₩10,000,000 of tuition for one university student and ₩4,000,000 for one school-age child. The premiums sit inside the ceiling, so 12% of ₩1,000,000 gives a credit of ₩120,000. The medical threshold is 3% of ₩50,000,000, or ₩1,500,000, so only ₩1,500,000 of the ₩3,000,000 counts and 15% of that is ₩225,000. The other ₩1,500,000 is swallowed by the threshold and earns nothing.

For education, the ₩10,000,000 of university tuition is cut to the ₩9,000,000 ceiling and the ₩4,000,000 of school costs to the ₩3,000,000 ceiling, so ₩2,000,000 is lost, and 15% of the recognised ₩12,000,000 gives ₩1,800,000. Adding the three items, the tax falls by ₩2,145,000. Now keep everything else but reduce ordinary medical costs to ₩1,000,000 and put ₩8,000,000 of hospital bills for a parent aged over 65 in the uncapped box. The ₩1,500,000 threshold takes ₩1,000,000 from the ordinary box and the remaining ₩500,000 from the parent's bills, leaving ₩7,500,000 eligible; the medical credit jumps to ₩1,125,000 and the total to ₩3,045,000.

The most common mistake is not knowing about the medical threshold. Up to 3% of gross salary the credit is zero no matter what you spend, so on a ₩50,000,000 salary the first ₩1,500,000 of hospital bills changes nothing. The next is entering a parent's or your own medical costs in the ordinary box. They belong in the uncapped box, which avoids the ₩7,000,000 ceiling, and because the threshold is deducted from the ordinary box first, simply splitting the costs correctly changes the result.

On education, people often include a child's postgraduate tuition. That is not eligible, whereas your own postgraduate study is recognised with no ceiling, so it does not belong in the children's box here. Tuition paid from a student loan is also excluded from children's education costs. On insurance, savings-type policies are sometimes mistaken for protection-type cover, and any payout received from an indemnity policy has to be taken off the medical costs. Medical costs incurred abroad do not qualify. Finally, because you enter each item yourself, the split may differ from how the tax office's simplified data classifies it, so it is worth reconciling with that data before filing.