Deductions and Tax Percentages-Tax Information for U.S. Citizens Living in Korea

Salary payments vary in Korea depending on the organization you work for. Some are paid bimonthly, others monthly, while others are never paid at all. However, the deductions from these payslips are fairly consistent. This page attempts to outline the nature of the deductions and tax percentages that will appear in each and every one of your payslips (for the purpose of this website, the pay statement will be referred to as the payslip).

Deductions and Tax Percentages

The most significant deductions from each payslip will be the combination of Income Tax, National Pension and Medical Insurance.

Income Tax

Income Tax is a progressive tax, meaning that the more you make, the more you have to pay in tax. Rather than labor over the intricate mathematics that were used to produce these scales, we recommend that you use the service that the National Tax Service (NTS) already has in place to calculate your monthly deduction. Click here to calculate your deduction.

By way of comparison, if you make 2 000 000 Won per month, you can expect to pay approximately 28 950 Won in Income Tax.

National Pension

The National Pension, unlike Income Tax, is a flat tax, whereby everyone will pay the same percentage of their gross income. As of 2001, the current rate is 4.5% of your salary. As an American citizen, you are eligible to retrieve those funds when departing the country. Click here.

If you want to see documentation that explains the nature of these changes made in 2001, please click here but be advised that the document is meant for accountants.

Medical Insurance

Since Korea has a national health plan, Medical Insurance deductions are a fairly common feature on most payslips. If you choose, you can participate in the Medical Insurance plan chosen by your employer and be taxed accordingly. The tax percentages for medical insurance vary depending on the type of organization you work for, but the majority of U.S. citizens in Korea not working for or associated with the military, the tax rate is 3.94% of your salary. If you would like to receive more in-depth information concerning medical insurance in Korea, please refer to to this link.

Please refer to the following website for further economic and legal information for foreign workers residing in Korea:

EFL-Law.com

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Granted, many of you will proclaim that you have other withholding deductions taken from your salary. However, those are of the suspicious variety. We recommend taking the time to communicate with your employer to determine the exact nature of the deductions. If that doesn't work, deduct your professionalism from their organization.

Created July 10, 2005 by Michael Sean Gallagher
Content by: Michael Gallagher