History and principles
Korea's 1949 Income Tax Act taxed each kind of income separately (schedular taxation). A 1975 reform combined them under one progressive schedule, in line with the ability-to-pay principle. In 1996 Korea moved from government assessment to self-assessment, so taxpayers now calculate and file their own tax. Retirement income and capital gains are still taxed separately so that decades of gains don't land in a single year's bracket.
Who files
May filers include freelancers who had 3.3% withheld, sole proprietors, side-hustlers with income beyond their salary, residential landlords, and anyone with interest and dividends over ₩20 million a year. Workers with only salary income are settled through year-end tax settlement but can use May to claim deductions they missed. Rates rise from 6% on taxable income up to ₩14 million to 45% above ₩1 billion, plus a 10% local income tax surcharge. Gauge the real burden by the effective rate, not the marginal rate.
Expenses and penalties
With proper books you deduct actual expenses. Without them, the National Tax Service applies a simplified or standard expense ratio for your industry. Thanks to the simplified ratio, many low-earning freelancers get much of their 3.3% back. Missing the deadline adds a 20% non-filing penalty plus 0.022% a day for late payment. Businesses must also file VAT.
FAQ
- Why do freelancers get a refund?
- The 3.3% is a prepayment; if actual tax after expenses is lower, the difference is refunded.
- Do salaried workers file in May?
- Only if they have other income, such as a side business or rental income, or want to claim missed deductions.
Sources reviewed: 2026-10-26
References
- 소득세법 제4조(소득의 구분), 제55조(세율), 제70조(종합소득과세표준 확정신고).
- 국세청. (2025). 「종합소득세 신고 안내」.
- OECD. (2024). Taxing Wages 2024. OECD Publishing.