Tax Credit for Monthly Rent up to 10 Million KRW and Total Salary up to 80 Million KRW
Gift Tax Minimum Tax Rate Applied for 6 Billion to 12 Billion KRW Range
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 passed the 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 and process it. The amended tax law will take effect from January 1st next year.
The amendment to the Inheritance and Gift Tax Act, which includes the establishment of a 100 million KRW limit for marriage gift tax exemption, passed with 160 votes in favor, 44 against, and 52 abstentions out of 256 members present. 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 in total from both families without gift tax. However, to allow unmarried households with children to enjoy the same benefits, a childbirth gift property deduction was also added. They can choose either 100 million KRW for marriage or childbirth.
The amendment to the Restriction of Special Taxation Act includes expanding the monthly rent tax credit starting next year. The monthly rent tax credit, aimed at reducing housing costs for low-income earners, was previously available for total annual income up to 70 million KRW and up to 7.5 million KRW per year. This will be expanded to 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 amount of credit card usage exceeding 5% compared to this year, allowing a maximum additional income deduction of 1 million KRW. The minimum gift tax rate (10%) applied when business owners transfer their businesses to their children will have its taxable bracket raised from the current 6 billion KRW to up to 12 billion KRW.
As a measure against low birth rates, the amendment to the Income Tax Act, which raises the tax credit amount for the second child from 150,000 KRW to 200,000 KRW and expands the basic deduction target from children to grandchildren, also passed the plenary session.
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