The card deduction is not a prize for spending more — how the same ₩20M of spending became ₩1.5M or ₩3M

Two employees each put ₩20M a year on cards. Their total salary is the same, ₩40M. At year-end settlement one received a card deduction of ₩1.5M; the other, ₩3M. What separated them was not how much they spent but how they paid. One used credit cards for everything; the other put half on debit cards. The card deduction is not a prize for spending a lot; it is a prize for spending by the rules.

Its formal name is the income deduction for credit-card and similar usage, in Article 126-2 of the Restriction of Special Taxation Act. Under the current text it is a sunset provision applying to amounts spent through 31 December 2028. Parliament has a long history of extending it, but the law always carries an end date. The base figure is total salary, not gross pay: it excludes non-taxable pay, so it can differ from your headline salary.

Step one, the 25% threshold. The deduction does not attach to everything you spend. The article sets a floor called the minimum usage amount: 25% of total salary. At ₩40M in total salary the threshold is ₩10M. Spend ₩10M on cards in a year and you sit exactly on the threshold with a deduction of ₩0. Spend ₩9M and it is still ₩0. "A lot" is measured not by your habits but by a quarter of your salary. If you do not cross it, this deduction is not your program, and knowing that saves tax too. Spending more to manufacture a deduction is spending 100% to get 15% back.

Step two, rates by payment method. The amount above the threshold is multiplied by 15% for credit cards, 30% for debit cards and cash receipts, and 40% for traditional-market and public-transit spending. At total salary of ₩70M or less, culture spending such as books and performances gets its own 30%. One rule hides here: the money that sits below the threshold is filled from the lowest-rate credit-card spending first.

So the conclusion is simple. Spending up to the threshold earns nothing either way, so use the credit card with the best perks; move the spending beyond the threshold to debit cards and cash receipts.

Step three, the cap. The basic cap is ₩3M at total salary of ₩70M or less and ₩2.5M above (Art. 126-2 para. 10). With children it rises. At ₩70M or less it is ₩3.5M for one child and ₩4M for two or more (above ₩70M, ₩2.75M and ₩3M). That child add-on came in with the 2025.12.23 amendment, so it applies to amounts spent from 2026 onward. If someone with ₩40M in total salary spent ₩60M on a debit card, the arithmetic gives ₩15M but it is cut at the ₩3M basic cap. There is one more door above the cap (para. 11): traditional-market, transit and culture spending earns ₩3M more at total salary of ₩70M or less and ₩2M more above, separate from the basic cap. Add ₩3M of traditional-market spending to the extreme case and it becomes ₩3M + ₩1.2M = ₩4.2M.

Step four, so how much comes back. Everything so far was the deduction, meaning the amount removed from income. The tax you actually get back is the deduction times your tax rate, because that is how an income deduction works. For an employee whose taxable income is in the 15% bracket, 16.5% of the deduction comes back including local income tax. The person with a ₩1.5M deduction pays about ₩247,500 less, and the one with ₩3M about ₩495,000 less. One choice of payment mix separated them by close to ₩250,000 a year. In the 15% bracket, moving ₩1M of above-threshold spending from credit to debit returns ₩24,750 more in tax with spending unchanged.

To check your own numbers there are only two things to look at. First, your total salary. Get it from last year's withholding statement or your payroll office and multiply by 25% for your threshold. Second, this year's spending by payment method so far. The year-end simplified data only opens in January after the year ends, so mid-year use your card company's statements or Hometax's year-end settlement preview (around November each year, with January to September spending) to split credit cards, debit cards and cash receipts. If you have already crossed the threshold, the remaining spending does better on debit and cash receipts. Near the threshold, the payment method of one big purchase becomes the fork. Far below it, there is no reason to force it.

One caution. Cash receipts are issued only on request. Pay cash without asking for the receipt and that spending is counted nowhere. One sentence at the register decides whether the same cash spending qualifies for the 30% rate or not.

Two things to do now. Multiply your total salary by 25% and write down your threshold, then check this year's usage in your card statements or the year-end settlement preview and decide how to pay for the rest of the year. Details such as company-expensed amounts, certain excluded items and which spouse claims what differ case by case, and since this is a sunset provision, check each time whether it has been extended.