Miscellaneous Income Tax Exemption for Job Placement and Career Transition Allowances
Previously Paid Taxes Refundable Through Revised Tax Return
"Sequential Guidance to Be Provided"
The Small Enterprise and Market Service announced on the 28th that, starting this month, it will exempt the 22% miscellaneous income tax previously imposed on job placement allowances and career transition incentives received by small business owners who have closed or are planning to close their businesses.
To support the recovery of small business owners who have closed or are planning to close their businesses, the Small Enterprise and Market Service provides a "Hope Return Package," which includes job training, job placement allowances, and career transition incentives as a comprehensive support package. If a closed small business owner participates in the Ministry of Employment and Labor's National Employment Support Program and completes job training, they can receive a job placement allowance of 200,000 won per month for up to six months. The career transition incentive, which supports job-seeking activities, is provided in up to two installments, with a maximum total of 1 million won.
Previously, both the job placement allowance and the career transition incentive were subject to taxation, so the Small Enterprise and Market Service withheld 22% of the payment and remitted it to the National Tax Service. As a result, the actual amount received was reduced, leading to complaints that the effectiveness of the livelihood support was diminished.
To improve the system, the Small Enterprise and Market Service has been consulting with relevant agencies since the beginning of this year, and recently received a response from the National Tax Service stating that the job placement allowance and career transition incentive are considered livelihood support and do not fall under miscellaneous income.
Starting with this month's payments, the Small Enterprise and Market Service will provide the full amount of the job placement allowance and career transition incentive without any tax deductions. Small business owners who previously paid taxes can receive a refund through a revised tax return. However, for those who receive payments in 2025, a revised tax return can only be filed after the comprehensive income tax filing period in May 2026.
The Small Enterprise and Market Service plans to sequentially inform eligible recipients about the revised tax return process.
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