Minimum Gift Tax Rate Applied to Tax Bracket Up to 12 Billion KRW
Second Child Tax Credit Increased to 200,000 KRW
Starting next year, newlywed couples can receive support of up to 300 million KRW from both families without gift tax. Additionally, the tax credit amount for the second child will be increased from the current 150,000 KRW to 200,000 KRW.
At the National Assembly plenary session held on the afternoon of the 21st, the ruling and opposition parties will also pass a tax law amendment containing these provisions along with the next year's budget bill. The day before, the floor leaders of both parties agreed to submit the tax law amendment, which was approved by the National Assembly's Planning and Finance Committee on the 30th of last month, as a supplementary bill to the budget for processing. If passed at this plenary session, the amended tax law will take effect from January 1 of next year.
The amendment establishes a new marriage gift tax deduction limit of 100 million KRW. Currently, when parents transfer assets to their children, only up to 50 million KRW over 10 years is exempt from tax. With this tax law amendment, children getting married can inherit up to 150 million KRW per person tax-free. Newlywed couples will thus be able to receive support of up to 300 million KRW from both families without gift tax. However, to ensure that households with childbirth but no marriage can enjoy the same benefits, a childbirth gift property deduction has also been added. Families can choose either 100 million KRW for marriage or childbirth.
For business owners passing down their family business to their children, the lowest gift tax rate (10%) taxable bracket will be raised from the current 6 billion KRW to up to 12 billion KRW. The current 5-year installment payment period for gift tax will also be extended to 15 years.
To reduce the housing cost burden for low-income earners, the monthly rent tax credit, which was previously available for total annual income up to 70 million KRW and up to 7.5 million KRW per year, will be expanded to cover total annual income up to 80 million KRW and up to 10 million KRW per year. Additionally, for next year, a 10% income deduction rate will be applied to the portion of credit card usage exceeding 5% compared to this year, allowing for up to 1 million KRW more in income deductions.
As a measure against low birth rates, the current tax credit of 150,000 KRW for the first child and an additional 150,000 KRW for the second child will be increased to 200,000 KRW for the second child.
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