As the year-end tax settlement season approaches, tax experts emphasize that workers can increase their "13th-month salary" by carefully reviewing the expanded deductions available this year.
The National Tax Service (NTS) launched its year-end tax settlement preview service through Hometax on Friday and will operate it until the end of January next year, the agency said. Taxpayers can use the service to calculate their taxes based on credit and debit card spending from January to September this year and the deduction amounts reported in last year's tax settlement.
Claim Dependents Under Higher Earner, Credit Cards Under Lower Earner
Year-end tax settlement is finalized through income deductions and tax credits. Income deductions subtract a certain amount from the income earned by workers over a specific period. Tax credits, on the other hand, directly subtract a fixed amount from the calculated tax. Income deductions provide greater tax savings for higher earners, while tax credits remain the same regardless of income level.
For two-income households, claiming deductions for dependents, education expenses and insurance premiums under the higher earner yields greater tax savings. Credit card and medical expense deductions are better consolidated under the lower earner.
Child Credits Increased by 100,000 Won; Pools and Gyms Now Included
This year, deduction amounts increased by 100,000 won each to reduce the burden of childbirth and childcare. The credits apply to children or grandchildren aged 8 or older: 250,000 won for the first child, 300,000 won for the second, and 400,000 won for the third.
Gym and swimming pool fees are now included in income deductions for the first time. For payments made after July 1, 2025, workers with total salary of 70 million won or less can claim a 30% deduction on gym and swimming pool fees, up to an annual limit of 3 million won. Both private and public sports facilities are eligible. Personal training and lesson fees are not deductible in principle, but if they cannot be separated from facility usage fees, 50% of the total amount is recognized as deductible.
Benefits for Non-Homeowners and Newlyweds
Deduction benefits for non-homeowners have also expanded. Previously, income deductions for housing rental loan repayments were only allowed when lending institutions transferred funds directly to landlord accounts.
Starting this year, those who refinanced their loans can also receive the same income deduction.
Additionally, the income deduction for non-homeowner heads of household with total salary of 70 million won or less who contribute to housing subscription savings accounts has been expanded to include spouses, allowing deductions of 40% of contributions up to 3 million won annually.
The tax-free interest income benefit of 5 million won for non-homeowner heads of household with total salary of 36 million won or less who hold youth-preferred housing subscription savings accounts now also applies to spouses.
Couples who registered their marriage between 2024 and 2026 can also receive a marriage tax credit of 500,000 won per person this year.
