The government is introducing a Youth-exclusive Comprehensive Individual Savings Account (ISA) to support asset building for young people.

To eliminate the "marriage penalty," the income deduction on repayments for key money (jeonse) or monthly rent deposits—previously limited to homeless household heads—will be expanded to cover both spouses in homeless weekend-couple households.

The Ministry of Economy and Finance announced the 2026 tax code revision plan today, which includes measures to support youth, marriage, and childbirth.

The newly launched Youth ISA targets individuals aged 34 or younger with a total annual salary of 75 million won or less, or a total global income of 63 million won or less, offering a 10% income deduction on their contributions.

The contribution limit is set at 20 million won per year, up to a total of 200 million won.

Similar to the newly established productive finance ISA, all interest and dividend income will be fully tax-exempt.

The investment period is three years, but it can be extended in increments of up to three years for a maximum total of 10 years.

The tax system is also being revised to reflect the marriage-friendly institutional improvement measures announced in June.

Currently, the government provides a 40% income deduction on the principal and interest repayments for jeonse or monthly rent deposits made by wage earners who are household heads and do not own a home.

Moving forward, both spouses in separate weekend-couple households who do not own a home will each receive a 40% income deduction on their respective principal and interest repayments for jeonse or monthly rent deposits.

The deduction limit remains capped at 4 million won per year combined for couples, the same as currently.

In addition, even if two compact-car owners marry and form a household owning two compact cars, a fuel tax refund will still be permitted for one of the compact cars.

Currently, fuel tax refunds are not provided if a household owns two or more vehicles.

The income tax exemption period for childbirth subsidies will be expanded from "within two years after the child's birth date" to "from the child's conception date until two years after birth."

This means the period from conception to childbirth will also be included in the tax exemption scope.

The income tax credit rate for monthly rent for young people will be set at 17% आयुष्मान.

Currently, workers with an annual salary of 80 million won or less receive a 15% tax credit on up to 10 million won per year for monthly rent, while those with an annual salary of 55 million won or less receive a 17% tax credit. This means the rate for young people will be matched to the higher tier.

To help young people secure their retirement, the income tax credit rate applied to individual retirement pension (IRP) contributions will also be set at 15%.

Currently, a 15% deduction is applied to retirement pension contributions for those with an annual salary of 55 million won or less, but only a 12% deduction is given to those with higher salaries.

Value-added tax (VAT) will also be exempted for public-type dormitories provided by the Korea Student Aid Foundation and dormitory services offered by the Korea Private School Promotion Foundation.

This creates room for a reduction in dormitory fees, helping alleviate the housing cost burden for college students.

The VAT exemption period for meal services provided at schools, factories, and construction sites will likewise be extended by three years.

This is aimed at lowering the meal expense burden for students.

Along with these measures, the government will extend the tax exemption period for interest income from the Armed Forces Tomorrow Preparation Savings, which soldiers join and save in during their military service, by another three years.

The income tax exemption for childcare allowances—subsidies related to raising children aged 6 or younger received by workers from their employers—will now also include foster children.

The tax-free limit per child is 200,000 won per month.

(Photo: Yonhap News)