[Exclusive] Hyundai Motor Retirees Face Crackdown on “Car-Tech”...25% Discount Benefits Also Taxed

Ministry of Strategy and Finance introduces non-taxable threshold for retiree discounts in tax law amendment
"Taxation began on employee discounts two years ago... Ensuring tax fairness"
Comprehensive taxation applies to amounts above 3 million

Going forward, if a long-serving Hyundai Motor retiree purchases a Genesis GV80, valued at 80 million won, at a 25% discount, only 4 million won of the 20 million won discount will be taxed. In cases where the retiree is subject to a 35% income tax rate due to re-employment or other sources of income after retirement, the tax alone could amount to approximately 1.4 million won. This is because the government has decided to impose taxes not only on discounts for current employees but also on discounts for retirees.

Genesis GV80. Hyundai Motor Company

Only Hyundai and Kia provide retiree discounts... Ministry of Economy and Finance: "Ensuring fairness between employees and retirees in taxation"

According to the Ministry of Economy and Finance on August 14, the "2026 Tax Law Amendment" includes the introduction of a new non-taxable threshold for discounts received by retirees when purchasing their own company or affiliate’s products at prices lower than market value. Following the 2024 amendment, which deemed employee discounts as earned income and taxed them accordingly, the same standards will now be applied to retirees to ensure tax fairness. An official from the Ministry of Economy and Finance stated, "While the discounts for current employees have been taxed as earned income, retirees were placed in a legislative blind spot," adding, "We have introduced 'other income' taxation to rectify what has been overlooked so far and to apply the same standards for tax equity."

The non-taxable limit is set at the greater of 20% of the fair market value or 2.4 million won per year. Taxes will be applied to any discount amount that exceeds this non-taxable limit. Those most directly affected by this tax law revision are retirees from Hyundai Motor and Kia. Hyundai Motor and Kia currently provide a 25% discount on new vehicles for long-serving retirees (25 years or more of service), which can be used every two to three years. Major domestic corporations such as Samsung Electronics and LG Electronics do not typically provide discounts to retirees, only to current employees.

Tax liability differs significantly based on vehicle price and retiree’s income... Retirees’ "car investment" also restricted

The actual tax amount varies greatly depending on the type of car and the retiree’s income. If a retiree purchases a Grandeur worth 50 million won, a 25% discount would equal 12.5 million won. Of this, up to 10 million won, equivalent to 20% of the market price, is non-taxable, and only the excess 2.5 million won is counted as other income. Since a separate taxation rate of 20% applies for non-salary income up to 3 million won per year, the tax will be 500,000 won.

However, in the case of a high-end vehicle such as the Genesis GV80, which is worth 80 million won, the situation changes. Out of the 20 million won discount, the non-taxable limit (16 million won, which is 20% of the market price) deducted, the excess subject to taxation would be 4 million won. If the additional other income subject to taxation exceeds 3 million won per year, a separate tax rate cannot be applied, and it will be subject to comprehensive taxation along with other income.

If a retiree falls within the 35% income tax bracket (taxable income between 88 million and 150 million won), due to re-employment or rental income after retirement, they will have to pay approximately 1.4 million won in taxes on the 4 million won excess. If the retiree is in the 24% tax bracket (taxable income between 50 million and 88 million won), the tax will be about 960,000 won. The more expensive the vehicle and the higher the retiree's post-retirement income, the steeper the tax burden.

In addition, to prevent so-called "car investment," where retirees resell vehicles purchased at a discount on the used car market soon after purchase, the government plans to introduce a Presidential Decree requiring a mandatory holding period during which resale is prohibited. For current employees, cars and home appliances purchased at a discount cannot be resold within two years. Violations result in the loss of non-taxable benefits.

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