[What Changes in the New Year] Separate Taxation Benefit for Dividend Income, 4 Million Won Card Deduction for Two Children

Starting next year, separate taxation will be introduced for dividend income from high-dividend listed companies. The credit card deduction limit for households with multiple children will be increased by 1 million won per person, and the non-taxable limit for childcare allowances will also be expanded. In addition, a new 10% income and corporate tax credit will be established for webtoon content production costs.

On the 1st, during the plenary session of the National Assembly, an amendment to the resolution urging the United States to provide tax support for Korean electric vehicles based on the Korea-US Free Trade Agreement (FTA) was passed. Photo by Yoon Dongju doso7@

The Ministry of Economy and Finance announced on December 31 that, beginning next year, separate taxation at lower rates will be applied to dividend income for investors in high-dividend listed companies. For companies with a dividend payout ratio (cash dividends to net profit) of 40% or higher (including those with a payout ratio of at least 25% and an increase of 10% or more compared to the previous year), investors will be subject to separate taxation on dividend income as follows: 14% for amounts up to 20 million won, 20% for amounts between 20 million and 300 million won, 25% for amounts between 300 million and 5 billion won, and 30% for amounts exceeding 5 billion won.

This separate taxation on dividend income will apply to business income for 2026, starting with dividends paid next year, and will be implemented as a temporary measure for three years until 2028.

Based on the premise of introducing a financial investment income tax, the securities transaction tax will be raised by 0.05 percentage points each for KOSPI and KOSDAQ starting in January next year. The KOSPI market transaction tax rate will be adjusted from the current 0% to 0.05%. The special rural tax (0.15%) will remain unchanged. For the KOSDAQ and K-OTC markets (which are not subject to the special rural tax), the rate will be adjusted from 0.15% to 0.20%.

The non-taxable limit for childcare allowances (for children aged six or younger) will be expanded from 200,000 won per month per worker to 200,000 won per month per child. The 15% education expense tax credit will now include tuition for arts and physical education academies for lower-grade elementary students, and the basic deduction limit for credit card and similar income deductions will be increased according to the number of children.

The tax-free "Youth Future Savings" program, designed to help young people build seed money, will be launched in June next year. To better support asset formation for young people, the program will reduce the burden of long-term participation (maturity of three years) and increase the government contribution rate (6% for the standard type, 12% for the preferred type).

For young people with annual income of 60 million won or less who deposit 500,000 won per month for three years (a total of 18 million won), the government will provide 1.08 million won in interest support, allowing participants to receive a total of 20 million won including interest.

The basic limit for income deductions such as credit card use, which was previously unrelated to the number of children, will be increased by 500,000 won per child, up to a maximum of 1 million won. Households with annual income of 70 million won or less will receive a credit card income deduction of 3.5 million won per year if they have one child, and 4 million won per year if they have two or more children. For workers with annual income exceeding 70 million won, the basic limit will be increased to 250,000 won per child (up to a maximum of 500,000 won). The 15% education expense tax credit will also include tuition for arts and physical education academies for lower-grade elementary students.

A new tax credit will also be established for webtoon content production costs. This will provide a 10% income and corporate tax credit (15% for small and medium-sized enterprises) for expenses related to the production of webtoons and digital comics.