Year-end tax settlement in Korea (yeonmal jeongsan): a step-by-step guide for foreign employees

If you are a foreign employee in Korea, your employer withholds income tax from your salary every month. Yeonmal jeongsan (year-end tax settlement) is the annual process—run in January and February—where your employer reconciles those monthly withholdings against your true tax liability for the previous year. You either receive a refund or pay a small top-up; it appears as a line item on your February payslip. This guide walks you through every step.

How it works

Your employer estimates your tax each month and withholds it at source. Because the estimate is rough—it cannot know in advance how much you will spend on medical care or pension savings—the actual amount owed is almost always different. January is when you collect evidence of your deductible spending and give it to your employer’s HR or payroll team. February is when the employer files the final calculation with the National Tax Service (NTS) and adjusts your pay accordingly.

About 700,000 foreign workers were subject to the 2025 settlement, according to the NTS announcement in January 2026. The rules and deadlines are the same for foreign employees and Korean nationals, with one important extra option: the 19% flat rate, explained below.

Why Korea does it this way

Korea introduced employer-side year-end reconciliation in the 1950s so that most salaried workers would never need to file a personal tax return. The employer acts as a withholding agent throughout the year and as a tax reconciler in February. The NTS developed the digital Hometax platform to pre-populate deduction data automatically, reducing paperwork for both employees and employers.

The system has gradually opened to foreign workers. A notable 2026 change: foreigners married to Korean nationals became eligible for housing-subscription savings deductions (주택청약저축 소득공제) that were previously unavailable to non-citizens, as reported by the Asia Business Daily in January 2026.

The numbers that matter

What it means for you

Follow these steps in order. Each step names the exact document, portal, or office you need.

1. Decide: flat rate or progressive? If your salary is roughly above ₩80–100 million per year, the 19 % flat rate often saves money. If you are on a lower salary, the progressive rate with full deductions usually wins. Confirm the maths with a Korean tax accountant or your employer’s HR team before January. You must elect the flat rate each year on your tax settlement form; if you do not elect it, the progressive system applies automatically. Note: the flat rate covers employment income only.
2. Check your Hometax (홈택스) account before 15 January. Log in at hometax.go.kr using your Alien Registration Card (ARC, 외국인등록증) number and a digital certificate or simple password. Go to the simplified deduction data service (간소화 서비스). Your employer must have uploaded your name by 10 January. You must give consent by 15 January. After 17 January, one click downloads a pre-compiled PDF (or XML file) containing your medical receipts, insurance premiums, card spending, and pension contributions pulled from financial institutions nationwide.
3. Collect any documents not on Hometax. Some items are not auto-populated. Bring these to HR:
   • Rental contract (임대차계약서) for wolse (월세, monthly rent) — a copy of the signed lease and proof of rent payments (bank transfer records)
   • Jeonse (전세, large lump-sum deposit paid instead of monthly rent) loan interest certificate from your bank, if applicable
   • Education receipts from schools or academies not registered with the NTS
   • Receipts for medical expenses at foreign hospitals or clinics not yet on the system
4. Submit everything to your employer’s HR or payroll team. Your employer sets its own internal deadline, usually mid- to late January. Ask HR for the exact date. Missing it means you must file a correction (경정청구) yourself with the NTS later — inconvenient but possible within five years.
5. Review your February payslip. The settlement result appears as a separate line. A positive figure means a refund added to your salary. A negative figure means additional tax deducted. There is no separate cash payment; it all runs through the payroll.
6. Keep copies of everything for five years. The NTS can request supporting documents within five years of filing.

Where to check figures that change annually:

• Tax brackets and deduction limits: NTS (nts.go.kr) — updated each January for the prior tax year
• Flat rate eligibility window: NTS announcement — typically updated in December during the annual tax law amendment cycle
• Rent credit thresholds: NTS — updated each January
• Pension savings credit rates: NTS / Financial Supervisory Service — updated annually

FAQ

Do I have to do yeonmal jeongsan if I am only on a short-term work visa?

Yes. Any foreigner receiving salary income in Korea is subject to income tax withholding and must participate in the year-end settlement, regardless of visa type or length of stay. Your employer is legally required to process it. If you leave Korea mid-year, you may need to file a final return in May instead; confirm with the NTS or a tax accountant.

Can I claim the rent tax credit if my landlord is a private individual and not a company?

Yes, provided your total annual salary is ₩80 million or below and the rented property is below a set market value threshold. You must be named as a tenant on the lease, the property must be your primary residence, and you must not own any house in Korea. Submit your lease contract and bank transfer records to HR. Your landlord’s tax registration status does not affect your eligibility for the tenant credit.

What happens if I owe extra tax instead of getting a refund?

Extra tax owed is deducted directly from your February salary, or split across February and March if the amount is large. This is normal and does not indicate an error; it simply means your monthly withholdings were set slightly low — often because you had a pay rise during the year or claimed fewer deductions than expected. If the deduction would cause genuine hardship, ask HR whether your employer allows instalment deductions.

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