Separate Tax vs. Comprehensive Tax Calculator

One of the most common questions for Korean investors and savers: should I worry about the ₩20 million financial income threshold?

In Korea, interest and dividend income below ₩20 million (2,000만원) per year is taxed separately at a flat 14% (15.4% including local tax), withheld at source — no filing needed. Once financial income exceeds ₩20 million, the entire amount gets added to your comprehensive income and taxed at progressive rates of 6–45%. This is called 금융소득종합과세 (financial income comprehensive taxation).

The key question is whether your marginal tax rate — the rate applied to the last won of income — is higher or lower than the flat 14%. If it’s higher, staying below ₩20M is advantageous. If it’s lower (rare for most salaried workers), comprehensive taxation may actually result in less tax.

Enter your income below to see the comparison instantly.

Separate vs. Comprehensive Tax Calculator

Korea Financial Income Tax Comparison

Financial Income (interest+dividends, ₩10K)

Employment Income (₩10K)

Business/Other Income (₩10K)

₩20M threshold: Financial income exceeds ₩20M — comprehensive taxation is mandatory.

Tax Comparison

Separate Tax Amount

462

Flat Rate 15.4% · ₩10K

Comprehensive Tax (incremental)

656

Marginal Rate on Financial Income: 24% · ₩10K

Employment Income (₩10K)5,000 ₩10K

Employment Deduction−1,225 ₩10K

Basic Deduction−150 ₩10K

+ Financial Income (interest+dividends, ₩10K)3,000 ₩10K

Taxable Income6,625 ₩10K

Verdict

✓ Separate taxation is more advantageous

Difference: 194 ₩10K

Includes employment income deduction and basic personal deduction (₩1.5M). Additional deductions/credits are not reflected.

The ₩20 Million Threshold Explained

Scenario	Tax Treatment
Financial income ≤ ₩20M	Separate tax (14% + 1.4% local = 15.4%), no filing required
Financial income > ₩20M	Mandatory comprehensive taxation, file by May each year

The cliff effect: Going even ₩10,000 over ₩20M doesn’t just tax that small excess — the entire financial income (including the first ₩20M) is added to comprehensive income. Savvy investors intentionally manage their financial income to stay just under this threshold.

When Each Is Better

Separate tax is better when:

Your comprehensive income pushes your marginal rate above 14%
You earn ₩50M+ from employment/business (marginal rate: 24%+)
Simplicity matters — no additional filing needed

Comprehensive tax is better when (rare):

Total income is very low (marginal rate below 14%)
You have many deductions and credits that bring effective tax below 15.4%

Strategies to Minimize Financial Income Tax

ISA accounts: Interest and dividends earned inside an ISA account are excluded from the ₩20M threshold (first ₩2M tax-free, excess at 9.9%)
Pension savings (IRP/연금저축): Contributions reduce taxable income
Time your dividends: Spread dividend-paying stocks across years to stay under ₩20M annually
Long-term insurance products: Savings-type insurance held 10+ years may generate tax-exempt interest

Separate Tax vs. Comprehensive Tax Calculator: Korea Financial Income Tax