Guide · JOB · 101
Tax & the 4 insurances
What comes out of your paycheck, the year-end settlement, and the flat-rate option.
In short
- Two things are deducted from your pay: income tax and the 4 major insurances (pension, health, employment, accident). Together, roughly 9% of salary for a typical worker.
- 연말정산 (year-end settlement) every Jan–Feb compares the tax you prepaid with what you owed. Most foreign workers get a small refund (the "13th-month pay").
- Foreigners can elect a flat 19% tax rate (20.9% with local surtax) instead of progressive brackets, but you lose all deductions. It's usually only worth it for high earners.
- Your employer handles most of this, but knowing how it works helps you avoid overpaying.
Korea's payroll system does most of the work for you. Tax and insurance come out automatically, and your employer files your year-end settlement. A few choices (flat rate vs progressive, which deductions to claim) can still make a real difference to your refund.
What comes out of your paycheck
The 4 major insurances (4대보험) are split roughly 50/50 with your employer. Your employee share in 2026 is approximately:
| Insurance | Your share (2026) |
|---|---|
| National Pension (국민연금) | ~4.75% of salary (capped) |
| Health Insurance (건강보험) | ~3.545% + Long-Term Care add-on |
| Employment Insurance (고용보험) | ~0.9% |
| Industrial Accident (산재보험) | Employer pays 100% |
| Total employee share | ~9% of gross salary |
On top of that, income tax is withheld monthly. So a typical worker's total deductions land near 9–10% of gross (insurances) plus income tax on top.
Income tax: progressive vs flat
Korea's normal income tax is progressive: 6%–45% nationally, plus a 10% local surtax (so effective 6.6%–49.5%). Foreigners also have another option:
- Flat 19% rate (≈20.9% with local surtax), available for up to 20 years from your first work date in Korea.
- The downside: choosing it means you forfeit all deductions and credits (dependents, medical, education, card spending, housing, etc.).
- When it helps: generally only for high earners, roughly above ₩120–150M/year, where progressive rates would exceed 19%. Below that, progressive rates + deductions usually win.
연말정산: the year-end settlement
Your employer runs this every year in January–February. It isn't a new tax bill. It compares what was already withheld from your monthly pay with what you actually owed. Overpaid → refund (arrives in your Feb/Mar paycheck, the "13th-month pay"); underpaid → you pay the difference.
Download your deduction summary
In January, log in to Hometax (hometax.go.kr) with your ARC + verification and use the 간소화 서비스 (Simplified Service) to auto-collect your medical, insurance, card, pension and other data. Then use "Download All at Once" to get a PDF. You don't need to collect paper receipts.
Add anything the system missed
Notably the monthly rent (월세) deduction. Foreigners often miss this one. Attach your lease contract if eligible. If electing the flat rate, submit the 단일세율 적용신청서.
Submit to HR by their deadline
Your HR/경리 team files on your behalf. They usually want documents by early-to-mid January.
Get your refund (or pay the small difference)
Reflected in your February or March salary.
Do you need to file separately?
If you're a regular employee and your 연말정산 was done correctly, you generally don't file a separate return. It's final for employment income. But you must file a 종합소득세 (comprehensive income tax) return by May 31 if you have extra income (freelance, rental, significant overseas income) or if you chose the flat rate via annual filing. Freelancers/self-employed do not do 연말정산. They file in May instead.
Common questions
Should I pick the flat 19% rate?
Usually only if you earn high (roughly ₩120M+). Below that, progressive rates plus deductions typically give a lower bill. Calculate both each year before deciding.
What's the "13th-month pay"?
Nickname for the year-end settlement refund most workers get in February when they overpaid tax through the year.
Is there English help?
Yes. There's the NTS English helpline (126, or 1588-0560) and an English Hometax site with guides. Peak-season assistance centers have English-speaking staff (Apr–May).
Can I get my pension back when I leave?
Often yes. A lump-sum refund is available to nationals of many countries and to E-9 workers on permanent departure. Check with the National Pension Service before you go.
Sources: National Tax Service (nts.go.kr / hometax.go.kr), Income Tax Act, PwC Korea Tax Summaries 2026, National Pension Service. Rates and the 20-year flat-rate window per 2026 rules.
Last verified: July 2026. Rates, brackets and thresholds change yearly and depend on your situation. Verify with NTS (126) or a licensed 세무사. General information, not tax advice.
Tax season questions?
Ask others which deductions they claimed and whether they used the flat rate. Post in the community and tag it Jobs.