Income Tax Rate Raised to 45% for Ultra-High Earners with Annual Income Exceeding 1 Billion Won

[Image source=Yonhap News]

[Asia Economy Reporter Park Cheol-eung] Married couples holding a jointly owned single home can now apply for elderly and long-term ownership deductions under the comprehensive real estate tax. The top income tax rate for high-income earners with annual income exceeding 1 billion KRW has been raised to 45%.

On the 2nd, the National Assembly held a plenary session and passed bills including amendments to the Comprehensive Real Estate Tax Act and the Income Tax Act reflecting these changes.

The amendment to the Comprehensive Real Estate Tax Act allows married couples with jointly owned single homes to either receive a deduction of 600 million KRW each, paying tax on the portion exceeding a publicly announced price of 1.2 billion KRW as before, or choose to apply the basic deduction of 900 million KRW like a single homeowner while receiving elderly and long-term ownership deductions. For couples who have jointly owned a single home for a long time, the comprehensive real estate tax burden can be reduced by up to 80%.

The amendment to the Income Tax Act establishes a new tax bracket for comprehensive income exceeding 1 billion KRW, raising the income tax rate in this bracket from the existing 42% to 45%. It also includes a plan to classify virtual assets such as cryptocurrencies as other income for taxation. Income exceeding 2.5 million KRW annually from cryptocurrencies like Bitcoin will be subject to a 20% tax.

The amendment to the Restriction of Special Taxation Act was also passed. It extends the application of the "Good Landlord Tax Credit," which deducts 50% of the reduced rent from the landlord's income tax and corporate tax, until June 30 of next year.

The Securities Transaction Tax Act was also approved, reducing the securities transaction tax by 0.02 percentage points next year and by 0.08 percentage points in 2023, lowering it to a final rate of 0.15%.