Payroll in South Korea 2026: 4 insurances, tax and minimum wage

In South Korea the employer withholds income tax every month from the National Tax Service's simplified tax table, plus local income tax of 10% of that tax, and deducts the employee's pension, health, long-term care and employment insurance, about 9.7% of pay in 2026. On top of salary the employer pays about 10% to 10.6%, plus industrial accident insurance.

Payroll in South Korea at a glance

The four major insurances

Korean payroll revolves around the four major social insurances (4대보험): national pension, national health insurance (with long-term care), employment insurance and industrial accident compensation insurance.

National pension. Under the 2025 pension reform the contribution rate, 9% until 2025, rises by 0.5 percentage points every year from 2026 until it reaches 13% in 2033, and the income replacement rate rose from 41.5% to 43% in 2026. The employer pays half. The contribution is capped at the upper limit of the standard monthly income, which is adjusted every July: the maximum employee contribution was KRW 302,570 from January to June 2026 and is KRW 313,025 from July 2026 to June 2027.

Health and long-term care insurance. The health insurance premium is the monthly average wage times 7.19%, half paid by the employer. The long-term care premium is calculated from it: the health insurance premium times the long-term care rate divided by the health insurance rate. Together they come to about 8.135% of pay in 2026, about 4.07% on each side.

Employment and industrial accident insurance. The employee pays 0.9% for unemployment benefits; the employer pays the same 0.9% plus 0.25% to 0.85% for employment stabilisation and vocational skills development, depending on the size of the company. Industrial accident compensation insurance is paid only by the employer, at a rate set by industry.

Income tax and local income tax

The simplified tax table

The employer withholds income tax each month from the simplified tax table for wage income, published by the National Tax Service. The table is looked up with:

• the monthly salary, excluding non-taxable income such as an own-car driving allowance of up to KRW 200,000 a month
• the number of family members the employee can deduct, including the employee
• a reduction for children aged 8 to 20: KRW 12,500 for one child, KRW 29,160 for two, and KRW 25,000 more for each further child

The employee can ask for 80%, 100% or 120% of the table amount by filing an adjustment request with the employer; without a request, 100% applies. The table is not changed every year.

Local income tax of 10% of the income tax is withheld at the same time and paid to the local government where the employee works.

The rates behind the table

Year-end tax settlement

Monthly withholding is an estimate. In the year-end tax settlement the employer recalculates each employee's tax for the year with their deductions and credits, and refunds or collects the difference when paying the February salary of the following year.

Minimum wage, working hours and severance pay

The Minimum Wage Commission sets one national minimum wage each year:

The 2027 rate was decided on 14 July 2026 and announced on 5 August 2026; it applies from 1 January 2027, so update pay scales and hourly rates for January's payroll.

The monthly figure assumes 209 paid hours a month. Maximum weekly working hours under the Labor Standards Act are 52. The Act applies in full to workplaces with five or more workers, and some provisions, including those on weekly holidays and wages, also apply to smaller ones.

Severance pay (퇴직금) is a legal retirement benefit: 30 days' average wages for each year of service. Under a retirement pension plan, the employer sets aside an equivalent amount with a financial institution outside the company.

Monthly payroll calendar and filings

1. 1Every pay day: deduct the four insurances, income tax from the simplified tax table and local income tax.
2. 2By the 10th of the following month: file the withholding return and pay the income tax and local income tax withheld. Employers that pay semi-annually pay January to June by 10 July and July to December by 10 January.
3. 3Every month: pay the employee and employer social insurance contributions.
4. 4Every July: apply the new national pension ceiling.
5. 5With February's pay: carry out the year-end tax settlement for the previous year.
6. 6By 10 March: submit the wage income payment statements (지급명세서) for the previous year.

Worked example: KRW 3,000,000 a month

A single employee with no dependants and no non-taxable allowances earns KRW 3,000,000 a month in 2026, in a company in the lowest employment stabilisation band (0.25%). Long-term care is calculated from the combined rate, so its figures are rounded estimates.

Income tax comes from the simplified tax table row for KRW 3,000,000 with one deductible family member (the employee), at the percentage the employee chose; local income tax is 10% of that amount. Both are deducted from the pay above. The employer also pays industrial accident insurance at its industry rate.

Common mistakes

1. 1Keeping the 9% pension rate. It is 9.5% from January 2026 and rises again every January until 2033.
2. 2Missing the July update of the pension ceiling.
3. 3Forgetting long-term care insurance on top of health insurance.
4. 4Counting non-taxable allowances as salary when looking up the simplified tax table.
5. 5Forgetting local income tax, which is 10% of the income tax and goes to a different authority.
6. 6Paying below the new minimum wage in January, when the rate changes.

How Clientlly helps

Clientlly does not ship a built-in payroll profile for South Korea. An administrator enters the rates once in the payroll tax settings: the income-tax bands, the personal allowance, the employee and employer contribution rates (pension, health, long-term care and employment insurance) and the minimum wage. Clientlly then calculates gross to net and the employer contributions and produces payslips. Korea's monthly income tax comes from the National Tax Service's simplified tax table, so compare the tax on each payslip with the table.

Around payroll, Clientlly handles leave requests and approvals with a shared leave calendar, attendance and overtime tracking with attendance and time tracking, and HR documents for each employee. See all human resources features, or compare plans on the pricing page.