In 2026 a Korean employer pays about 10.5–11.5% of gross salary in social insurance on top of pay and accrues roughly 8.3% for severance, while employees contribute about 9.7% and pay income tax at 6–45% plus a 10% local income tax. For a KRW 60 million salary, we estimate a total employer cost of about KRW 71.9 million and take-home pay of about KRW 49.7 million.
What are Korea's social insurance rates in 2026?
Every employee is enrolled in the four major social insurances (4대보험, sadae boheom). In 2026 the employer pays about 10.5–11.5% of gross salary for an office job and the employee about 9.7%, deducted from pay.
| Scheme | Total rate | Employer | Employee | Notes |
|---|---|---|---|---|
| National Pension | 9.5% | 4.75% | 4.75% | Monthly earnings floor KRW 410,000 and cap KRW 6,590,000 from July 2026 |
| Health insurance | 7.19% | 3.595% | 3.595% | Frozen at 7.19% for 2027 |
| Long-term care | 13.14% of the health premium (≈0.945% of wages) | Half | Half | Collected with health insurance |
| Employment insurance | 1.8% plus 0.25–0.85% employer-only | 1.15–1.75% | 0.9% | Employer add-on depends on company size |
| Industrial accident | Average 1.47% | 100% | 0% | Varies by industry; unchanged for a third year |
Because of the pension cap, neither side pays more than KRW 313,025 a month in pension contributions (KRW 6,590,000 × 4.75%). The employer-only employment insurance add-on depends on headcount:
| Company size | Employer add-on | Employer total | Employee |
|---|---|---|---|
| Under 150 employees | 0.25% | 1.15% | 0.9% |
| 150+ employees (priority-support companies) | 0.45% | 1.35% | 0.9% |
| 150–999 employees | 0.65% | 1.55% | 0.9% |
| 1,000+ employees or government bodies | 0.85% | 1.75% | 0.9% |
Industrial accident rates are set by industry classification. Foreign employees join health and accident insurance; pension and employment insurance depend on nationality and visa status, and some departing foreigners can claim a lump-sum pension refund.
What changes in 2027?
The National Pension rate rises to 10% on 1 January 2027, health insurance stays at 7.19%, and the minimum wage rises to KRW 10,700 an hour. The 2027 long-term care rate is set separately later in the year, so check the National Health Insurance Service before finalizing a 2027 budget.
| Item | 2026 | 2027 |
|---|---|---|
| National Pension | 9.5% (4.75% each) | 10% (5% each), rising 0.5 points a year to 13% by 2033 |
| Health insurance | 7.19% | 7.19% (frozen, decided 8 September 2026) |
| Minimum wage | KRW 10,320 per hour | KRW 10,700 per hour |
On a KRW 5 million monthly salary, the pension increase adds KRW 12,500 a month for the employer and the same for the employee (0.25% × KRW 5,000,000).
How is employment income taxed in Korea?
Korea taxes employment income at progressive national rates of 6–45% on taxable income, plus a local income tax (지방소득세, jibang sodeukse) equal to 10% of the national tax.
| Annual taxable income (KRW) | National rate | Including local tax |
|---|---|---|
| Up to 14 million | 6% | 6.6% |
| 14–50 million | 15% | 16.5% |
| 50–88 million | 24% | 26.4% |
| 88–150 million | 35% | 38.5% |
| 150–300 million | 38% | 41.8% |
| 300–500 million | 40% | 44% |
| 500 million–1 billion | 42% | 46.2% |
| Over 1 billion | 45% | 49.5% |
Taxable income is far below gross pay. Non-taxable items come off first, such as a meal allowance of up to KRW 200,000 a month when meals are not provided. Then come the employment income deduction (KRW 12 million plus 5% of pay above KRW 45 million for pay between KRW 45 million and 100 million), a basic deduction of KRW 1.5 million per person, and the employee's own social insurance contributions. Tax credits, including the earned income tax credit, then reduce the bill. Severance is taxed separately as retirement income, not added to salary.
How do withholding and year-end settlement work?
The employer withholds income tax and local income tax every month and remits it by the 10th of the following month; once a year, the year-end settlement (연말정산, yeonmal jeongsan) recalculates the true tax and refunds or collects the difference through February pay.
- Monthly withholding: apply the National Tax Service (NTS) simplified withholding table, which sets tax by monthly pay and number of dependents. Employees can choose 80%, 100% or 120% of the table amount.
- Monthly filing: file the withholding return and pay the tax by the 10th of the following month, usually through the NTS Hometax system.
- January–February: employees submit their deduction and credit records, and the employer recalculates the year's tax.
- February payroll: refund or collect the difference and issue each employee a withholding receipt by the end of February.
- By 10 March: file the settlement with the tax authorities.
Employees whose only income is salary are done after the year-end settlement and do not need to file a May return. Someone who leaves during the year is settled with their final month's pay.
Should foreign employees choose the 19% flat tax rate?
Usually only high earners benefit. Foreign employees who start working in Korea by 31 December 2026 can elect a flat 19% rate (20.9% with local income tax) on their total employment income for 20 years from their first day of work in Korea, instead of the progressive rates.
The trade-offs are significant: all deductions, exemptions and credits are lost, and non-taxable income such as a meal allowance is added back. The election is not available to employees of a company treated as a related party. It can be made through the employer at monthly withholding or year-end settlement, or in the May return.
On a KRW 60 million salary the flat rate would cost KRW 11.4 million plus KRW 1.14 million of local tax, against about KRW 4.47 million under progressive rates in the example below. Run both calculations every year.
What does a KRW 60 million salary cost in Korea?
We estimate a total employer cost of about KRW 71.9 million a year (about 120% of salary) and take-home pay of about KRW 49.7 million (about KRW 4.14 million a month). Assumptions: KRW 5 million gross a month with no non-taxable allowances, a company with under 150 employees, the 1.47% average accident rate, and a single employee with no dependents claiming only the deductions shown below.
| Employer cost | Rate | Monthly (KRW) | Annual (KRW) |
|---|---|---|---|
| Gross salary | — | 5,000,000 | 60,000,000 |
| National Pension | 4.75% | 237,500 | 2,850,000 |
| Health insurance | 3.595% | 179,750 | 2,157,000 |
| Long-term care | 13.14% of health premium | 23,620 | 283,440 |
| Employment insurance | 1.15% | 57,500 | 690,000 |
| Industrial accident | 1.47% | 73,500 | 882,000 |
| Severance accrual | 1/12 of salary | 416,667 | 5,000,000 |
| Total employer cost | ≈ 5,988,537 | ≈ 71,862,440 |
Employer social insurance alone is KRW 6,862,440 a year, or 11.4% of salary.
| Employee pay | Annual (KRW) |
|---|---|
| Gross salary | 60,000,000 |
| National Pension (4.75%) | −2,850,000 |
| Health insurance (3.595%) and long-term care | −2,440,440 |
| Employment insurance (0.9%) | −540,000 |
| Income tax | ≈ −4,068,000 |
| Local income tax | ≈ −407,000 |
| Take-home pay | ≈ 49,694,560 |
How the income tax is estimated:
- Employment income deduction: 12,000,000 + 5% × (60,000,000 − 45,000,000) = 12,750,000.
- Other deductions: basic 1,500,000, pension contributions 2,850,000, and health, long-term care and employment insurance contributions 2,980,440.
- Taxable income: 60,000,000 − 12,750,000 − 1,500,000 − 2,850,000 − 2,980,440 = 39,919,560.
- Tax: 14,000,000 × 6% + 25,919,560 × 15% = 840,000 + 3,887,934 = 4,727,934.
- Earned income tax credit, capped at 660,000 at this salary: 4,727,934 − 660,000 = 4,067,934, plus 10% local tax of 406,793.
Real employees often pay less income tax, because dependents, card-spending deductions and insurance, medical and education credits reduce it. Bonuses, benefits and any EOR fee come on top of the employer cost. Our compensation guide covers salary structure, and the labor law guide explains severance.
What changes when you pay a contractor from abroad?
A foreign company with no Korean presence generally does not withhold Korean tax or pay social insurance for a contractor: it pays the gross fee, and the contractor reports and pays their own tax. The savings hold only if the person is genuinely independent.
| Paid by a Korean business | Paid from abroad by a foreign company | |
|---|---|---|
| Tax at payment | 3.3% withheld (3% income tax plus 0.3% local income tax) | Usually nothing withheld |
| Contractor's annual return (due 31 May) | Reports the fees; tax withheld is credited | Reports the full fees and pays the tax due |
| Social insurance | Contractor enrolls individually | Contractor enrolls individually |
The same logic applies to employees paid from abroad with no Korean entity bearing the cost: this "Class B" income is not withheld, so the employee files an annual return by 31 May or pays monthly through a licensed taxpayers' association.
Two risks remain. A contractor who works like an employee can be reclassified, with back-dated severance and social insurance; see employment types. And an agent who habitually concludes contracts for you, or staff providing services in Korea for more than six months in any 12-month period, can create a permanent establishment that exposes your company to Korean corporate tax.
How Hire From Korea helps
Hire From Korea is a recruiter-led hiring partner that delivers a shortlist of 3–5 vetted Korean candidates and coordinates interviews in English and Korean. Beyond recruiting, we offer contract review, payroll and tax support and EOR setup on a custom quote. Fees are a one-time setup fee of USD 500–1,000 for pre-screening and consultation and a success fee of 15–20% of first-year salary, charged only on a successful hire. Ask us for a cost estimate and we will reply within 24 hours.
Frequently asked questions
Do foreign employees in Korea pay into the National Pension?
Generally yes, if they are aged 18–59 and work at a covered workplace. Exceptions depend on nationality: a social security agreement or reciprocity rules can exempt them, and some can claim a lump-sum refund of contributions when they leave Korea.
Can an employee agree to opt out of social insurance in Korea?
No. Enrollment is mandatory for eligible employees, so a private agreement to skip contributions does not remove the obligation, and the employer remains liable for the unpaid contributions.
Do bonuses count for social insurance and income tax in Korea?
Yes. Bonuses are taxable employment income, and social insurance contributions are based on total remuneration, so regular bonuses raise both. Health insurance contributions are adjusted against actual annual pay.
Who handles year-end settlement for an employee hired through an EOR?
The Employer of Record does, because it is the legal employer and withholding agent. It runs monthly withholding, the year-end settlement and the withholding receipts, while you fund the salary, employer contributions and its fee.
Are meal allowances taxable in Korea?
A meal allowance of up to KRW 200,000 a month is non-taxable when the employer does not provide meals. Anything above that, and most other cash allowances, counts as taxable employment income.
Sources
- National Pension Service — English site — pension contribution rate, earnings cap and floor
- KOTRA / InvestKorea — Labor Laws in Korea 2025 — employment insurance employer rates by company size; pension rules for foreigners
- PwC Worldwide Tax Summaries — Korea, individual deductions — employment income deduction, basic deduction, social insurance deductions
- PwC Worldwide Tax Summaries — Korea, individual tax credits — earned income tax credit and its caps
- PwC Worldwide Tax Summaries — Korea, income determination — 19% flat-rate conditions, meal allowance exemption, 3% business income withholding
- KPMG — Taxation of International Executives: South Korea (March 2026) — withholding deadlines, Class B income, flat-rate election
- National Tax Service — Year-End Tax Settlement Manual for Foreigners — February settlement, withholding receipts, 80/100/120% withholding choice
- PwC Worldwide Tax Summaries — Korea, corporate residence — permanent establishment rules
This guide is general information, not legal or tax advice. Rules change — confirm specifics with a licensed Korean labor attorney (노무사) or tax accountant.