[Second Half Economic Policy] 5.6 Trillion Support for Price Stability... Income Tax Reduction for Career-Interrupted Men

Expansion of Medical Expense Support... Student Loan Interest Rate Freeze
Expansion of Tax Benefits for SME Workers

The government has decided to support the economy with approximately 5.6 trillion won in fiscal spending to stabilize inflation at the 2% level in the second half of the year. It will also increase new stockpiles to ensure that agricultural and marine products can be supplied at affordable prices. Tax benefits for workers in small and medium-sized enterprises (SMEs) will be significantly expanded. Men with career interruptions working in SMEs will also be eligible for income tax reduction benefits.

Kim Byunghwan, Vice Minister of Strategy and Finance, is presenting the main points at the "Dynamic Economy Roadmap and Detailed Briefing on the 2024 Second Half Economic Policy" held at the Government Sejong Complex on the morning of July 1.

On the 3rd, the Ministry of Economy and Finance announced these inflation stabilization measures in the 'Second Half Economic Policy Direction.' To keep inflation in the 2% range in the second half, about 5.6 trillion won will be provided to alleviate living cost burdens.

In addition to expanding contract farming for fruits, whose prices have risen sharply, the government will newly stockpile 1,400 tons of garlic, onions, and dried red peppers. For low-income groups heavily burdened by rising prices, government rice, which has been sold at 40% of market prices, will be further discounted by 20%. Public utility fees will minimize increases by reducing costs, and if unavoidable, the timing of increases will be staggered or deferred.

Medical expense support will also be expanded to reduce core living costs. Using 10 billion won from the lottery fund, support for catastrophic medical expenses such as non-covered treatments and out-of-pocket payments will be increased. Previously, support was determined by summing medical expenses incurred for the 'same illness,' but going forward, medical expenses for 'all illnesses' incurred within one year will be aggregated for support.

Student loan interest rates will also be frozen. The interest rate for student loans in the second semester of next year will be fixed at 1.7%, and the scope of income-contingent repayment student loan support will be expanded. Previously, support was provided up to income bracket 8, but this will be extended to bracket 9. The government will also reattempt to repeal the Mobile Device Distribution Improvement Act (DanTongBeop) in the second half to ease telecommunications fee burdens.

Tax benefits to increase income for SME workers will be strengthened. Men with career interruptions working in SMEs will also be eligible for income tax reductions. The SME employment income tax reduction system provides a 70% income tax cut for three years (90% for youth aged 15?34 for five years) to youth, seniors (60 and older), persons with disabilities, and women with career interruptions (re-employed in the same industry within 2 to 15 years after retirement) who work in SMEs.

Men who have experienced career interruptions due to marriage, childcare, and child education will now be included in the policy target. The requirement for women with career interruptions to be re-employed in the 'same industry' will also be abolished to broaden support. The tax credit for companies paying performance bonuses, which ends this year, and the income tax reduction on performance bonuses received by workers will be extended for three years until December 2027. Similarly, the income tax reduction on company contributions when key SME personnel receive maturity payments from the Tomorrow Filling Deduction will also be extended for three years. Deduction requirements will be relaxed as well.