Savings Taxed at Lower Rates: Who Qualifies and Up to How Much

Who Can Open Tax-Free Comprehensive Savings

The name suggests anyone can open one, but Article 88-2 of the Restriction of Special Taxation Act defines who is eligible. If you subscribe in this form to a deposit or installment savings product sold by a bank, savings bank, or cooperative, no income tax is imposed on the interest.

Those eligible are people aged 65 or older, persons with disabilities, independence patriots, persons wounded in national service, basic livelihood security recipients, patients with Agent Orange aftereffects, and persons injured in the May 18 Democratization Movement.

The limit is a principal of KRW 50 million per person. Even if you spread subscriptions across several financial institutions, the total is capped at KRW 50 million, and any excess is handled under general taxation. The deadline is December 31, 2028; subscribe by then and no income tax applies to the interest and dividends that follow.

Rather than reducing the rate, the scheme imposes no income tax at all, so the local income tax that follows interest also disappears. Under general taxation, the 15.4% that would have been deducted is removed entirely.

How Much You Actually Save

This is the difference between holding the same deposit under general taxation and under tax-free comprehensive savings, at 2.5% per year (pre-tax) for one year.

2.5% per year is a figure used to show the calculation structure, not a published rate for any specific product. The general taxation column is net of interest income tax of 15.4%.

The tax saved is the interest multiplied by 15.4%, so it grows as the rate rises. Taking a principal of KRW 50 million as the basis, the figures by rate are as follows.

What becomes tax-free is interest income and dividend income. The principal was never taxed to begin with.

Cooperative Deposits Changed in 2026

Deposits held by members of 농협, 수협, 신협, 새마을금고 are subject to a separate rate. It is set by Article 89-3 of the Restriction of Special Taxation Act, with a limit of KRW 30 million per person.

For a long time this scheme imposed no income tax on interest. As the application dates were split, however, deposits opened in 2026 are taxed at 5% income tax, and those opened from 2027 at 9%.

Residents falling under Article 88-5 (2) 1 are subject to different dates. Subscriptions from 2026 through 2028 bear no income tax, with 5% applying to 2029 subscriptions and 9% from 2030.

There is one more point beyond the rate. Interest from cooperative deposits is not aggregated into the comprehensive income tax base. That means the amount is excluded when testing whether interest and dividends exceed KRW 20 million. Individual local income tax is not imposed either.

5% and 9% are still lower than the 15.4% under general taxation. That said, tax exemption and preferential taxation are different things. Calculating on the assumption that there is no tax at all produces a figure larger than what you actually receive. The rate is fixed by the time of subscription, so check the date recorded for your account.

How the Two Schemes Differ

Anyone who qualifies for both can use both. With limits of KRW 50 million and KRW 30 million respectively, a combined KRW 80 million is covered by the lower rates.

For KRW 100 million, that means KRW 50 million in tax-free comprehensive savings, KRW 30 million in cooperative deposits, and the remaining KRW 20 million in an ordinary deposit. Held at 2.5% per year for one year, tax of KRW 77,000 applies only to the KRW 20 million in the ordinary deposit, while interest on the other KRW 80 million is taxed at the lower rates.

Placing the same KRW 100 million entirely in an ordinary deposit produces a tax of KRW 385,000. Splitting it alone reduces the tax by KRW 308,000. When interest and dividends together exceed KRW 20 million, they become subject to comprehensive taxation of financial income, and interest from tax-free savings is not counted in that total.

Frequently Asked Questions