Starting next year, dual-income households with a total annual income exceeding 50 million won will also become eligible for the Earned Income Tax Credit (EITC).

The maximum payout will also be raised to 3.6 million won in line with the inflation rate.

The income threshold for spouses and dependents eligible for deductions during year-end tax settlement will be raised to 3 million won or less.

The housing subscription savings income deduction, which the government has periodically considered abolishing, will be regularized by scrapping its sunset clause altogether.

The Ministry of Economy and Finance announced the 2026 tax code revision plan today, which includes these support measures for ordinary people and the middle class.

The government aims to provide stronger protection for low-income earners by expanding the income requirements and payout amounts of the EITC.

The annual income requirements will be raised by 4 million won, 5 million won, and 8 million won to 26 million won for single-person households, 37 million won for single-income households, and 52 million won for dual-income households, respectively.

This adjustment takes into account next year's minimum wage (10,700 won per hour).

The maximum payouts will be increased by about 9 percent—or 150,000 won, 250,000 won, and 300,000 won, respectively—to 1.8 million won for singles, 3.1 million won for single-income households, and 3.6 million won for dual-income households.

This reflects the inflation rate (about 8%) since the revision in 2022.

The flat rate bracket for dual-income households will be expanded from between 8 million and 17 million won to between 8 million and 18 million won.

The flat rate bracket is a household income range where households can receive the maximum payout without reduction even if their income increases.

Previously, if a couple each earned 9 million won before marriage, they could receive a total of 3.3 million won, but upon marriage, they became a dual-income household and their total benefit was reduced to 3.18 million won. This revision aims to eliminate this marriage penalty.

According to the government's analysis, 4.89 million households will be eligible to receive the EITC following this revision, an increase of 730,000 households compared to before.

The total payout amount is estimated to increase by 1.2 trillion won to 5.9 trillion won.

The government is also expanding the monthly rent limit eligible for the monthly rent tax credit.

Workers with a total annual salary of 80 million won or less currently receive a tax deduction of 15% or 17% on their monthly rent (capped at 10 million won per year). To ease housing burdens, the monthly rent limit eligible for the deduction will be increased by 2 million won to 12 million won per year.

Currently, if a homeless worker with an annual salary of 50 million won pays 1 million won in monthly rent, their deduction amount is 1.7 million won. Under the new system, they will be able to deduct 2.04 million won, an increase of 340,000 won.

The recognition criteria for spouses and dependents, which can determine whether year-end tax settlement results in a 13th-month salary or an additional tax burden, will also be eased.

The income amount criteria for spouses and dependents who receive a basic deduction of 1.5 million won per person during comprehensive income tax reporting will be raised from 1 million won or less (5 million won or less in total salary if only having earned income) to 3 million won or less (7.5 million won in total salary if only having earned income).

This takes into account the cumulative inflation over the years.

For example, even if a spouse earns 500,000 won per month (6 million won in annual total salary) in earned income, they will be eligible for the basic deduction from now on.

The government is regularizing the housing subscription comprehensive savings income deduction, which it has reconsidered abolishing every time its sunset clause approached.

This is to support the housing stability of homeless households.

Various special taxation exemptions for corporate tax, dividend income tax, transfer income tax, and value-added tax granted to farming and fishery partnership corporations and agricultural corporations will also be regularized this time.

The 100% reduction in transfer income tax on livestock barns and fishery land used for 8 years or more will also be regularized.

The application period for indirect tax exemptions on petroleum products for agricultural, forestry, and fishery use will be extended by three years until the end of 2029.

For property placed in trust by a person with a disability, the non-inclusion limit for gift tax assessment value will be raised from 500 million won to 1 billion won.

The withholding tax burden on delivery riders will also be eased.

Currently, personal service business income obtained by providing services independently without physical facilities is subject to withholding tax at a rate of 3 percent before reporting comprehensive income tax. This tax rate will be lowered to 2 percent.

However, foreign professional athletes, who are subject to a 20 percent rate, and insurance salespersons, whose tax settlement is completed through year-end tax settlement, will maintain their current tax rates.

The application period for preferential tax deductions for deemed purchase input tax on value-added tax in the restaurant industry will be extended until 2028.

When VAT-taxable goods are used as raw materials, such as tax-exempt agricultural products, it is assumed that there is purchase input tax, which is then deducted.

For businesses with annual sales of 400 million won or less, the preferential deduction rate was decided to be raised from 8/108 to 9/109 until this year. By extending this period by two years, the government intends to support small business owners.

The application period for medical expense, education expense, and monthly rent tax deductions for faithful business operators and subjects of faithful tax return verification will also be extended by three years.

This is part of supporting self-employed individuals.

To stabilize housing for ordinary citizens, the application period for the tax exemption special provision for small-scale housing when taxing deemed rental income on key money (jeonse) will be extended by three years.

To ease the burden of taxi fuel costs, the application period for reductions in individual consumption tax on liquefied petroleum gas (LPG) will also be extended by three years.

Special provisions such as the suspension of attachment for small and medium-sized business owners seeking to make a fresh start after receiving debt adjustments will also be extended by three years until 2029.

Enforcement will be strengthened to prevent traders from hoarding quota-tariff items—whose tariffs were temporarily lowered to stabilize prices—in warehouses to resell them later.

The import declaration deadline will be shortened from 30 days to 20 days from the date of entry into a bonded area, and the limit for additional taxes imposed when exceeding the deadline will be raised from 5 million won to 10 million won.

(Photo: Yonhap News TV capture, Yonhap News)