Year-End Tax Settlement for Foreign Workers in Korea (2026 Guide)

Every January–February, Korean employers recalculate the previous year's income tax for each employee. This is year-end tax settlement (연말정산). If too much tax was withheld from your monthly pay, the difference comes back as a refund, usually in your February or March salary. If too little was withheld, you pay the rest.

Foreigners use the same system with one extra choice: the single flat-rate option for foreign workers.

The flat-rate option (as of Oct 2026)

• Under the Restriction of Special Taxation Act, Art. 18-2, a foreign employee who first started working in Korea on or before 31 Dec 2026 can choose to have income tax set at 19% of gross employment income (20.9% including local income tax). This applies for tax years ending within 20 years of their first working day in Korea.
• If you pick it, no exemptions, deductions or credits apply (with narrow exceptions), and the income isn't added to your global income.
• Proposed change: the government's 2026 tax reform proposal (announced Aug 2026) would raise the rate to 21% (23.1% with local tax) for income from 1 Jan 2027 and extend the start-date deadline to 31 Dec 2029. This is a proposal; check whether it has passed before relying on it.
• Day laborers and people working for related-party companies are excluded.

Flat rate vs. progressive rates

Progressive rates run from 6% to 45% after deductions. Roughly:

• Flat rate tends to win for high earners with few deductions.
• Progressive tends to win for most mid-income earners, especially with dependents, rent, medical bills or a pension savings account. Ask payroll to calculate both. You can choose each year.

Key dates

• Mid-January: Hometax's Simplified Year-End Settlement data (연말정산 간소화) opens at hometax.go.kr (English available).
• Late January–February: employer deadline (set by your company).
• Missed something? File a correction request (경정청구) for up to 5 years.
• Help: NTS call center 126 (foreign-language service available), nts.go.kr.

The full guide covers step-by-step Hometax use, a deduction checklist with the documents Hometax doesn't collect for you, the flat-rate application form, settlement when leaving mid-year, and how to claim missed refunds later.

Step 1 — Get access to Hometax

• Log in with a joint/financial certificate from your bank, or simple authentication (간편인증). That needs a phone in your name.
• Hometax has an English interface. The settlement data menu is under "Year-end Tax Settlement Simplified Service."

Step 2 — Download your data (mid-January)

1. Hometax → 연말정산 간소화 → "근로자 (Employee)" → log in.
2. Review the data: credit/debit card spending, medical expenses, insurance premiums, education fees, donations, pension savings.
3. Download as a single PDF and send it to payroll, or allow your employer to fetch it if they use the "one-click" service.

Step 3 — Add what Hometax doesn't collect

• [ ] Monthly rent (월세): lease + rent transfer records. Rent credit has conditions (total salary under a threshold, housing size or price limits, address registration). Foreigners' eligibility depends on meeting the conditions for foreign residents; check NTS guidance for your case.
• [ ] Overseas dependents: proof of relationship (apostilled + translated), proof you support them, and proof they meet the income/age criteria.
• [ ] Medical expenses abroad: generally not deductible; Korean medical expenses only.
• [ ] Glasses or contact lenses: receipts if not in the data.
• [ ] Donation receipts from organizations not in the system.
• [ ] Corrections: remove items for family members someone else is claiming.

Step 4 — Fill in your employer's forms

• Income Deduction Declaration (근로소득자 소득·세액공제신고서): your dependents and claims.
• Flat-rate application: if choosing 19%, submit the application for the foreign worker tax special case (외국인근로자 단일세율 적용신청서) to your employer (or the tax office) as required by the enforcement decree. Ask payroll which form version they use.

Phrases to payroll

• "단일세율이랑 일반세율 중 어떤 게 유리한지 계산해 주실 수 있나요?" *(Could you calculate whether the flat rate or standard rates is better for me?)*
• "월세 세액공제 받으려고 계약서랑 이체내역 제출할게요." *(I'll submit my lease and transfer records for the rent credit.)*

Step 5 — Check the result

• Look at your withholding receipt (근로소득원천징수영수증), available from payroll or on Hometax from around March.
• 결정세액 (determined tax) minus 기납부세액 (tax already paid) = refund (negative number) or additional tax due.
• The refund appears in your February/March pay.

Deductions with the biggest impact (progressive method)

*Exact rates and limits are updated yearly; check the NTS year-end settlement guide for the tax year.*

Leaving Korea mid-year

• Ask your employer to do the settlement at departure (중도퇴사자 연말정산) with your final pay.
• If you had income from more than one employer, or other income, you may need to file global income tax (종합소득세) in May, or before you leave, through a tax agent or the tax office.
• National Pension lump-sum refund (반환일시금): depends on your nationality and any social security agreement. Check nps.or.kr or call 1355. You can claim it at the airport NPS counter or a branch.

Missed a deduction? Correction request (경정청구)

1. Hometax → 신고/납부 → 세금신고 → 종합소득세 → 경정청구, or ask the tax office (126 for help).
2. Attach the missing documents.
3. Refunds go to your registered Korean bank account, so keep it open.
4. Deadline: within 5 years of the original filing deadline.

What you can usually claim

• Credit/debit card and cash-receipt spending above a threshold of your salary (debit cards and cash receipts earn a higher rate than credit cards).
• National pension, NHIS and employment insurance contributions (automatic).
• Medical expenses above a threshold, education expenses, donations.
• Monthly rent credit (월세 세액공제) for eligible tenants meeting income and housing conditions — foreign residents can qualify in some cases (e.g. with a registered address and certain family conditions); check the current year's guide.
• Dependants in Korea (and, with proof, some dependants abroad).

Common foreigner-specific issues

• Mid-year arrivals: only income from when you started counts; deductions from before your Korean residence generally do not.
• Two jobs (allowed on your visa?): combine both incomes — either through the main employer or in May.
• Tax treaty exemptions: teachers/researchers from some countries may be exempt for a limited period under a tax treaty with Korea. You must apply via the employer and meet the treaty's conditions (some treaties are retroactive if you exceed the period). Ask for the treaty article in writing.
• Freelancers / side income: not covered by employer settlement — file in May.

May: comprehensive income tax filing (종합소득세)

File yourself on Hometax by 31 May if you:

• missed deductions in the year-end settlement (you can correct them in May, or later with an amended return within 5 years — 경정청구),
• had freelance (3.3% withholding) or other income,
• changed jobs and the new employer did not combine your income.

Common mistakes

• Assuming Hometax data is complete. Rent and overseas dependents are usually missing.
• Double-claiming a dependent (both spouses, or a sibling in Korea).
• Picking the flat rate without comparing. Many mid-income workers pay more with it.
• Missing the company deadline. You can still claim via 경정청구 later, but the refund comes months later.
• Closing your Korean bank account before a refund arrives.