[Amendment to Enforcement Decree of Tax Law] Expansion of Income Deduction for Housing Pension Interest Expenses... Tax Credit for Postpartum Care Expenses for All Workers

Ministry of Economy and Finance 'Follow-up Enforcement Decree Amendment after Tax Law Revision'
Tax Benefits for Investment in Opportunity Development Zone Fund over 10 Years

The standard market price for houses eligible for income deduction on housing pension loan interest expenses will be raised to 1.2 billion KRW. The scope of medical expense tax credits for postpartum care costs will also be expanded to include all workers.

On the 23rd, the Ministry of Economy and Finance announced the "Amendment to the Enforcement Decree following the Tax Law Revision," which includes these measures.

The requirements for income deduction on housing pension interest expenses will be relaxed. To promote housing pensions and secure retirement income, the housing price standard for applying the housing pension interest expense deduction will be raised from the previous standard market price of 900 million KRW to 1.2 billion KRW. The annual income deduction limit remains at 2 million KRW.

Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok (center) and other economic-related ministers are entering the Emergency Economic and Price-Related Ministers' Meeting held on the 16th at the Government Seoul Office in Jongno-gu, Seoul. Photo by Jo Yong-jun jun21@

The exemption requirements for individual consumption tax on passenger cars for multi-child families will also be eased. Previously, families raising three or more children under 18 years old were exempt from individual consumption tax on purchased cars up to an annual limit of 3 million KRW. Now, cases where families live separately due to unavoidable reasons such as schooling or illness are also included in the consumption tax exemption requirements.

The medical expense tax credit for postpartum care costs will be expanded from workers with a total salary of 70 million KRW or less to all workers. Additionally, when employers provide childbirth and childcare support payments to employees, these payments will be added to the employer’s deductible expenses and necessary costs. To alleviate childbirth and childcare burdens, operating expenses for workplace daycare centers and outsourced childcare fee subsidies paid by employers under the obligation to establish workplace daycare centers will also be exempt from taxable earned income.

Tax support within Opportunity Development Zones will also be expanded. Major industries with significant regional economic ripple effects, such as manufacturing, information and communication, and research and development, will receive a 100% income and corporate tax reduction for five years, followed by a 50% reduction for two years. For companies within the zones, the requirements for the successor to become CEO and restrictions on changing business types will be abolished.

For investments in Opportunity Development Zone funds held for more than 10 years, tax benefits (separate taxation at 9%) on interest and dividend income will apply to real estate and usage rights within the zones, real estate development projects, social infrastructure projects, and bonds and stocks of resident companies. The mandatory investment ratio for target assets is set at 60% or more.

All food manufacturing and beverage manufacturing industries will be added to the list of eligible industries for a 100% income and corporate tax reduction for three years and a 50% reduction for two years for companies located in the Jeju Investment Promotion District. Previously, animal fat manufacturing and other food manufacturing within the food and beverage manufacturing sectors were excluded from the tax reduction.