The Calculation Starts Above 25% of Total Salary
The scheme is set by article 126-2 of the Restriction of Special Taxation Act. The article puts 25 hundredths of total salary as the minimum spending amount and treats only the part above it as eligible.
On total salary of KRW 40 million the minimum spending amount is KRW 10 million. Spend KRW 9 million on cards in a year and the deduction is zero. Spend KRW 15 million and the KRW 5 million above the line enters the calculation.
One calculation goes wrong here often. Heavy card spending that produces a deduction of zero comes from failing to clear the minimum spending amount. Total salary of KRW 50 million takes KRW 12.5 million, and KRW 70 million takes KRW 17.5 million, before the calculation begins at all.
Total salary is pre-tax pay less non-taxable pay. The higher the income, the larger the amount to clear.
The minimum spending amount is taken first from credit card spending, which carries the lower rate. Spend KRW 15 million on a credit card and KRW 5 million on a debit card and KRW 10 million comes off the credit card portion, leaving KRW 5 million to calculate from. Were the order reversed, the debit card portion at 30% would have gone first and the deduction would have shrunk.
Each Payment Method Carries Its Own Rate
The percentage applied above the line is set by payment method.
Debit cards and cash receipts run at twice the credit card rate. Traditional markets and public transport come to a little under four times. The same spending produces a different eligible amount depending on where and how it was paid.
Credit cards carry their own payment benefits and debit cards carry the higher rate. Since nothing below the minimum spending amount is eligible anyway, filling that stretch with a rewarding credit card and switching to a debit card above it takes both. On total salary of KRW 40 million, that means credit card up to KRW 10 million and debit card above it.
The Same KRW 20 Million, Twice the Deduction
This is someone on total salary of KRW 40 million spending KRW 20 million in a year. The minimum spending amount is KRW 10 million.
KRW 3 million
The deduction from splitting spending into KRW 10 million on a credit card and KRW 10 million on a debit card. Credit card alone gives KRW 1.5 million.
Calculated after taking the KRW 10 million minimum spending amount from credit card spending first. The last row is a case where the result reaches the KRW 3 million cap.
Credit card alone puts 15% on the KRW 10 million above the line, giving KRW 1.5 million. Move half to a debit card and the minimum spending amount comes entirely out of the credit card portion, leaving the full KRW 10 million of debit card spending at 30% for KRW 3 million.
In tax removed that is KRW 247,500 against KRW 495,000. Changing the payment method alone makes a difference of KRW 247,500.
The middle split, KRW 15 million on a credit card and KRW 5 million on a debit card, deducts KRW 2.25 million. That is KRW 750,000 from applying 15% to the KRW 5 million left after taking the KRW 10 million minimum out of the KRW 15 million credit card portion, plus KRW 1.5 million from applying 30% to the KRW 5 million debit card portion.
Raising the debit card share raises the deduction until it stops at the KRW 3 million cap. In this example debit card spending of KRW 10 million reaches the cap, so there is no reason to switch beyond that.
The Cap Is KRW 3 Million or KRW 2.5 Million
However large the calculation, the amount deducted has a ceiling.
Where there are dependents, the article sets an additional cap separately. Your own cap appears in your year-end settlement result.
Filling the KRW 3 million cap does not return KRW 3 million, since this is an income deduction. The tax falls by that amount multiplied by your rate. At 16.5% that is KRW 495,000.
Once the cap is reached, further spending does not enter the deduction. How income deductions and tax credits differ is set out in income deductions and tax credits.
Above total salary of KRW 70 million the cap drops to KRW 2.5 million. As income rises, the minimum spending amount to clear grows and the available cap shrinks.
The deduction is calculated on spending through December 31 of that year. Where cap remains in December, filling the rest with a debit card or cash receipts raises the deduction. Where the cap is already reached, changing payment method changes nothing.
Frequently Asked Questions
Is everything I spend eligible?
No. The calculation starts above 25% of total salary. On total salary of KRW 40 million, nothing up to KRW 10 million is eligible, and the rates by payment method apply above that.
How should I split credit and debit cards?
Nothing below the minimum spending amount is eligible anyway, so fill that stretch with a rewarding credit card and switch above it to a debit card or cash receipts, which carry double the rate.
Which card does the minimum spending amount come off first?
Credit card spending, which carries the lower rate. That is why debit card spending receives the full 30%.
Does filling the KRW 3 million cap return KRW 3 million?
No. It is an income deduction, so taxable income falls by KRW 3 million and the tax falls by that amount multiplied by your rate. At 16.5% that is KRW 495,000.
What are the rates for traditional markets and public transport?
Both 40%, above the 15% for credit cards and the 30% for debit cards and cash receipts. Culture and sport spending is 30%.
What should I check in December?
Whether the KRW 3 million cap has been reached. If room remains, filling it with a debit card or cash receipts raises the deduction. If it is already reached, changing payment method makes no difference.
Does family spending count too?
Where there are dependents, the article sets an additional cap separately. What falls within scope can be checked as your own items in the simplified year-end settlement data.
Does a higher total salary work against me?
The minimum spending amount to clear grows, and above KRW 70 million the cap drops to KRW 2.5 million. An income deduction multiplies by the rate, though, so the same deduction removes more tax.
Sources and basis
- Income deduction for card and equivalent spending — Restriction of Special Taxation Act article 126-2
- Minimum spending amount — 25 hundredths of total salary for the tax year
- Rates — credit card 15%, debit and equivalent cards 30%, traditional markets 40%, public transport 40%, culture and sport 30%
- Cap — KRW 2.5 million a year, or KRW 3 million a year on total salary of KRW 70 million or less
- Calculation basis — total salary of KRW 40 million, with no additional dependent cap reflected
Tax law is subject to amendment. The law was verified on August 8, 2026.