[2021 Tax Reform] Soothing Angry Youth... Series of 'Youth Tax Benefits'

Youth Angered by Soaring Housing Prices and Employment Difficulties
New 40% Income Deduction for Youth Long-Term Funds and Tax Exemption on Interest Income from Youth Hope Savings
Income Requirement for 'Youth Preferential Housing Subscription Savings' Raised to Total Salary of 36 Million Won

[Asia Economy Reporter Jang Sehee] The latest tax reform proposal includes a large number of 'tax benefits for the youth' to appease young people angered by soaring housing prices and employment difficulties. The youth employment tax credit amount will be increased by 1 million won, and interest income from the Youth Hope Savings will be exempt from taxation.

The Ministry of Economy and Finance announced the '2021 Tax Law Amendment' containing these details on the 26th.

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, stated at a pre-briefing on the 2021 Tax Law Amendment held at the Government Seoul Office on the 23rd, "To support youth asset formation, a 40% income deduction for youth long-term funds will be newly established, and tax exemption on interest income from Youth Hope Savings will also be introduced."

Support for youth asset formation and housing will also be strengthened. An income deduction for youth long-term funds will be newly introduced. Accordingly, youths with a total salary of 50 million won or less can receive a 40% income deduction on fund contributions during year-end tax settlement.

The annual payment limit is 6 million won, and the investment period is 3 to 5 years. However, if during the subscription period total salary exceeds 80 million won or comprehensive income exceeds 60 million won, the relevant tax period will be excluded from the income deduction.

Tax exemption on interest income from Youth Hope Savings will also be newly introduced. It has a 2-year maturity with a maximum annual deposit of 6 million won, providing a 2% savings incentive in the first year and 4% in the second year. Saving 12 million won means receiving 360,000 won separately from bank interest. The income tax reduction on the Youth Employee Tomorrow Savings Deduction will also be expanded from 50% to 90%.

Furthermore, support for youth housing stability will be strengthened. When subscribing to the Youth Preferential Housing Subscription Savings, the income requirements will be expanded from a total salary of 30 million won to 36 million won, and from comprehensive income of 20 million won to 24 million won. The application period will also be extended by two years until the end of 2023.

Meanwhile, youths who are heads of households without housing with a total salary of 30 million won or less or comprehensive income of 20 million won or less can receive tax exemption benefits on total interest income up to 5 million won when subscribing to the Youth Preferential Housing Subscription Savings. The subscription period is at least 2 years, and the payment limit is 6 million won per year.