1 Million Won in Cash for Marriage... Marriage Tax Deduction to Be Provided as a Direct Subsidy

Detailed Measures to Be Announced in Early August Tax Reform Package

The government will change the current marriage tax deduction of 1 million won, which has so far been provided as a tax credit for newlyweds, to a system in which the same amount is paid directly as a cash subsidy. The income tax deduction for housing subscription savings will also become a permanent policy, with its sunset clause removed, in order to provide ongoing support for housing stability for lower-income households without homes.

According to relevant ministries on July 26, the Ministry of Economy and Finance will announce a tax reform plan including these measures in early August.

The marriage tax deduction is a policy that currently allows couples who have registered their marriage to receive a one-time lifetime tax deduction of up to 1 million won (500,000 won per person). However, because the benefit takes the form of a tax credit, low-income households with little or no tax liability have been unable to benefit, and recipients have had to wait until year-end tax settlements to see any effect.

The Ministry of Economy and Finance is expected to put forward specific measures in its tax reform plan as early as next month, coordinating with the Ministry of Economy and Budget. It remains undecided whether the direct subsidy amount will be maintained at the current tax deduction level of up to 1 million won, or whether it will be partially adjusted.

The income tax deduction for housing subscription savings will be transformed into a permanent system, with the sunset clause removed. The current policy allows households without homes to deduct 40% of their annual housing subscription savings contributions from income tax, up to a maximum of 3 million won per year.

Tax support for regional, small and medium-sized enterprises, and young people will also be strengthened. For young employees at small and medium-sized enterprises, earned income tax is reduced by 90% for five years after employment, while the reduction is 70% for elderly or disabled employees for three years. Additional preferential measures are to be introduced for those employed outside the Seoul metropolitan area.

The government is also considering raising the current flat tax rate of 19% for foreign workers, in order to ensure fairness compared to domestic workers, who are subject to a progressive tax rate of up to 45%.

This content was produced with the assistance of AI translation services.