The government is expanding benefits for Individual Savings Accounts (ISA) to promote long-term investment in domestic stocks and achieve the "KOSPI 5000" milestone.
Under the "2026 Economic Growth Strategy" announced by the Ministry of Economy and Finance on Wednesday, the government plans to introduce "Productive Finance ISA" accounts that offer enhanced tax benefits for investments in domestic stock funds, the National Growth Fund, and Business Development Companies (BDC).
The new Productive Finance ISA accounts are divided into two categories: Youth ISA and National Growth ISA. Both offer expanded benefits compared to existing ISA accounts.
The Youth ISA targets individuals aged 34 or younger with annual income of 75 million won or less. In addition to tax benefits on interest and dividend income, it will also provide income deductions on contributions.
"The Youth ISA is designed to help young workers in the early stages of their careers build medium- to long-term assets," First Vice Minister of Economy and Finance Lee Hyung-il said. "The National Growth ISA is designed to allow all citizens to participate and support long-term capital inflows into the stock market. We plan to significantly expand the benefits."
The government is also reviewing ways to offer greater benefits for the National Growth ISA compared to existing ISA accounts.
However, the new Youth ISA cannot be held simultaneously with the Youth Future Savings account or the National Growth ISA. Both the Youth ISA and National Growth ISA can be held alongside existing ISA accounts.
The Youth Future Savings is a policy finance product launching in June this year, designed to help young people accumulate savings in a short period. Participants can contribute up to 500,000 won monthly for three years and receive up to 22 million won including government contributions and interest.
Under current ISA rules, accounts held for at least three years qualify for tax-free benefits on profits up to 2 million won for the basic tier and 4 million won for the low-income tier. Gains exceeding these limits are subject to a separate tax rate of 9.9 percent.
ISA accounts allow investment in various products including domestic stocks, funds, and exchange-traded funds (ETF). However, direct investment in overseas-listed stocks and ETFs is not permitted. While investors cannot purchase Tesla shares through an ISA, they can invest in domestically-listed ETFs that hold Tesla.