How Income Tax Works in Korea — Building a Take-Home Pay Calculator

dev.to WebDev2026-10-10 12:490 views

How Income Tax Works in Korea — Building a Take-Home Pay Calculator

Most salary calculators in Korea just give you a number. Here's how to build one that shows the full breakdown — and why the math is more complex than it looks.

The Four Social Insurance Deductions

Korean employers deduct four mandatory contributions from gross salary:

Insurance	Employee Rate (2024)
National Pension	4.5%
Health Insurance	3.545%
Long-term Care	12.95% of health premium
Employment Insurance	0.9%

function calculateInsurance(monthlyGross) { const pension = monthlyGross * 0.045; const health = monthlyGross * 0.03545; const ltc = health * 0.1295; const employment = monthlyGross * 0.009; return { pension, health, ltc, employment }; }

Income Tax — The Simplified Table Method

Korea uses simplified withholding tax tables (간이세액표) for monthly payroll. The exact amount depends on:

Monthly taxable income (gross minus non-taxable items)
Number of dependents

Rather than implementing the full progressive tax brackets, payroll systems use pre-computed tables. For a calculator, the bracket approach is more transparent:

const TAX_BRACKETS = [ { limit: 14_000_000, rate: 0.06, deduction: 0 }, { limit: 50_000_000, rate: 0.15, deduction: 1_260_000 }, { limit: 88_000_000, rate: 0.24, deduction: 5_760_000 }, { limit: 150_000_000, rate: 0.35, deduction: 15_440_000 }, { limit: 300_000_000, rate: 0.38, deduction: 19_940_000 }, { limit: 500_000_000, rate: 0.40, deduction: 25_940_000 }, { limit: 1_000_000_000, rate: 0.42, deduction: 35_940_000 }, { limit: Infinity, rate: 0.45, deduction: 65_940_000 }, ]; function calculateIncomeTax(annualTaxable, dependents) { const bracket = TAX_BRACKETS.find(b => annualTaxable <= b.limit); const annualTax = annualTaxable * bracket.rate - bracket.deduction; const dependentDeduction = 1_500_000 * dependents; const finalTax = Math.max(0, annualTax - dependentDeduction); return finalTax / 12; // Monthly }

Local Income Tax

Local income tax (지방소득세) is simply 10% of the national income tax:

const localTax = incomeTax * 0.1;

Putting It Together

function calculateTakeHome(annualSalary, dependents = 1) { const monthly = annualSalary / 12; const insurance = calculateInsurance(monthly); const totalInsurance = Object.values(insurance).reduce((a, b) => a + b, 0); const annualTaxable = annualSalary - totalInsurance * 12; const incomeTax = calculateIncomeTax(annualTaxable, dependents); const localTax = incomeTax * 0.1; const totalDeductions = totalInsurance + incomeTax + localTax; const takeHome = monthly - totalDeductions; return { monthly, takeHome, totalDeductions, insurance, incomeTax, localTax }; }