The National Assembly approved next year’s budget and a series of tax amendments that raise corporate and education tax rates, introduce a new top bracket for separate dividend income taxation applicable to high-dividend listed companies.
The Korea (Rep.) National Assembly passed a series of budget-related amendment bills, including changes to the Corporate Tax Act that raise each of the four corporate tax brackets by 1%.
Corporate Tax Rate Increase
The National Assembly passed next year’s budget along with 16 associated bills, including a significant amendment to the Corporate Tax Act. The revised law raises each of the four corporate tax brackets by 1%, effective from 1 January 2026.
These revised rates are:
- Up to KRW 200 million: 10%
- KRW 200 million to KRW 20 billion: 20%
- KRW 20 billion to KRW 300 billion: 22%
- Above KRW 300 billion: 25%
Higher Education Tax for Large Financial and Insurance Firms
The National Assembly also approved amendments to the Education Tax Act, which will double the tax rate from 0.5% to 1% for financial and insurance companies with annual revenue of at least KRW trillion.
Changes to Dividend Income Taxation
The National Assembly also passed a restructuring of separate taxation for dividend income from high-dividend listed companies. A new top bracket has been introduced for income exceeding KRW 5 billion, taxed at 30%.
The updated tax brackets are:
- Up to KRW 20 million: 14%
- Over KRW 20 million and up to KRW 300 million: 20%
- Over KRW 300 million and up to KRW 5 billion: 25%
- Over KRW 5 billion: 30%
The updated structure of 14%, 20%, 25%, and 30% will apply to dividends paid in 2026 and remain in effect through 2028. To qualify for separate taxation, companies must maintain a dividend payout ratio of at least 40%, or at least 25% with an increase of 10% or more from the previous year.
