"Marriage Deduction Up to 300 Million Won" Tax Law Amendment Passes Finance Committee Plenary Meeting

The Tax Law Amendment Passed the Planning and Finance Committee Full Meeting on the 30th

The tax law amendment bill, which allows newlyweds to receive up to 300 million KRW in tax-free gifts from both families, passed the full meeting of the Planning and Finance Committee on the 30th.

On the same day, the National Assembly's Planning and Finance Committee approved a total of 15 tax law amendment bills, including the Income Tax Act, Corporate Tax Act, and Inheritance and Gift Tax Act.

The amendment grants an additional tax-exempt gift limit of 150 million KRW per person, up to a total of 300 million KRW from both families, to children who are getting married. From now on, newlyweds will be able to receive support of up to 300 million KRW from both families without gift tax. Currently, when parents transfer assets to their children, only up to 50 million KRW over 10 years is exempt from tax.

The ruling and opposition parties also added a gift property deduction for childbirth so that households with children born outside of marriage can enjoy the same benefits. This aims to improve fairness for non-marital births and respond to low birth rates. Through additional deductions per person, it is possible to choose either 100 million KRW for marriage or 100 million KRW for childbirth. There is also an option to split the additional deduction between marriage and childbirth.

The parties agreed to raise the minimum gift tax rate (10%) bracket applied when business owners pass down their family business to their children from the current 6 billion KRW to up to 12 billion KRW. The government’s original proposal was to increase it to less than 30 billion KRW, but it was revised to up to 12 billion KRW through negotiations between the floor leaders. The current 5-year installment payment period for gift tax was also adjusted from the government’s proposed 20 years to 15 years.

In addition, most of the government’s proposals for various tax reductions were accepted. These include tax exemption limits for childbirth and childcare allowances and raising the tax credit rate limit for large donations. The monthly rent tax credit, which was previously available up to 7 million KRW total annual salary and 7.5 million KRW per year, will now be available up to 8 million KRW total annual salary and 10 million KRW per year. As a measure against low birth rates, the current deduction of 150,000 KRW for the first child and an additional 150,000 KRW for the second child has been increased to 200,000 KRW for the second child.

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho is responding to lawmakers' questions at the plenary meeting of the Planning and Finance Committee held at the National Assembly on the 7th. Photo by Kim Hyun-min kimhyun81@