South Korea expands tax deductions for families with children

South Korea is changing its year-end tax settlement rules for families with children from the 2026 income year.

Workers earning up to 70 million won a year can deduct up to 350 million won in eligible card spending if they have one child, or 400 million won if they have two or more.

For workers earning more than 70 million won, those limits are 275 million won for one child and 300 million won for two or more.

The changes also introduce a tax credit for arts and sports academy fees for children in the lower grades of elementary school.

The higher card limits help only if card spending exceeds 25% of salary, and a larger cap does not automatically mean a larger deduction.

For example, a worker earning 50 million won with two children could save about 165,000 won in tax if they qualify for an extra 1 million won deduction and face a 15% tax rate.

The expanded card limits apply through the 2028 income year, so families will need to check their eligible spending when preparing their tax settlement.