The box to check is the National Tax Service requirements table: age, company, time of employment, reduction rate, period, cap, application documents and channel, excluded industries and excluded workers. Tax-saving simulations and sign-up boxes are not opened.
This post covers Korean tax rules, and the linked official sources are in Korean.
1. Official name and terms
The official name corresponding to the search term "youth income tax reduction" is "income tax reduction for SME employees." (S1, S2)
National Tax Service: "Income tax reduction under Article 30 of the Restriction of Special Taxation Act on earned income received from the company." (S1)
Title in the statute: "Article 30 (Income tax reduction for SME employees)." The Enforcement Decree provision is Article 27. (S2, S3)
The National Tax Service's tailored guide lists this scheme as a reference item for year-end tax settlement and notes the extension of its application deadline (2023→2026). (S1)
| Box | Term this post uses | Terms this post does not use |
|---|---|---|
| Statutory term | Income tax reduction (tax reduction) | Income deduction, tax credit |
| Source sentence | "reduce tax equal to 70/100 of the income tax (90/100 for youth) (with a cap of 2 million won per taxable period)" | — |
(S2)
Other income tax items that carry the same word "youth" get only one line. Youth long-term collective investment securities savings is an "income deduction" (Restriction of Special Taxation Act Article 91-20). It is not combined with the reduction covered here. (S8)
2. Requirements table — the youth box
Age is determined "as of the date the employment contract is signed." (S3, S1)
| Box | Original text | Source |
|---|---|---|
| Age | A person aged 15 or older and 34 or younger as of the date the employment contract is signed | [S3] [S1] |
| Military service deduction | Includes a person whose age, calculated by subtracting the period of military service performed (up to 6 years) from the age as of the date the employment contract is signed, is 34 or younger | [S3] |
| Types of military service | (a) Active-duty enlisted soldiers (including full-time reservists, conscripted police and conscripted firefighters) (b) Social service personnel (c) Active-duty officers, warrant officers and non-commissioned officers | [S3] |
| Time of employment | Employed from January 1, 2012 to December 31, 2026 | [S2] |
| Reduction rate | Tax equal to 90/100 of the income tax | [S2] [S1] |
| Reduction period | Until the month containing the day 5 years from the date of employment | [S2] [S1] |
| Cap | 2 million won per taxable period | [S2] [S1] [S3] |
Act Article 30(1): "where a person is employed from January 1, 2012 (January 1, 2014 for persons aged 60 or older or persons with disabilities) to December 31, 2026," "for income arising up to the month containing the day … 3 years [… 5 years for youth] from the date of employment, reduce tax equal to 70/100 of the income tax (90/100 for youth)." (S2)
The current enacted text of the Act gives an employment deadline of 2026.12.31., 5 years and 90% for youth, and a cap of 2 million won. Figures from later amendments: [source needed].
Past rates are one line in the notes to Form No. 11. Youth employed on or before 2013.12.31.: 3 years of continued employment, 100%. First employment 2014.1.1.–2015.12.31.: 3 years, 50%. First employment on or after 2016.1.1.: 3 years, 70% (cap 2 million won). "For youth, from earned income attributable to 2018 onward, the reduction applies for 5 years from the date of employment, reducing 90% of the income tax on earned income (cap 2 million won)." (S4)
3. Company requirements and excluded industries
The company is "a small or medium enterprise under Article 2 of the Framework Act on Small and Medium Enterprises (including non-profit enterprises) that is prescribed by Presidential Decree." (S2, S6)
National Tax Service: "A small or medium enterprise under Article 2 of the Framework Act on Small and Medium Enterprises whose main business is an eligible industry specified in Article 27 of the Enforcement Decree of the Restriction of Special Taxation Act." (S1)
Excluded bodies: "The State, local governments (including local government associations), public institutions under the Act on the Management of Public Institutions and local public enterprises under the Local Public Enterprises Act are excluded." (S3)
These are the industries listed as main businesses in Article 27(3) of the Enforcement Decree, with the exclusions in parentheses. (S3)
| Main business | Excluded in parentheses |
|---|---|
| Agriculture, forestry and fishing | |
| Mining | |
| Manufacturing | |
| Electricity, gas, steam and air conditioning supply | |
| Water supply, sewage and waste management, materials recovery | |
| Construction | |
| Wholesale and retail trade | |
| Transportation and storage | Excluding customs clearance under the Licensed Customs Brokers Act |
| Accommodation and food service | Excluding bars and non-alcoholic beverage establishments |
| Information and communications | Excluding video viewing room operation and virtual asset trading and brokerage |
| Real estate | Excluding real estate leasing |
| Research and development | |
| Advertising | |
| Market research and public opinion polling | |
| Architectural technology, engineering and other scientific and technical services | |
| Other professional, scientific and technical services | Excluding veterinary services |
| Business facilities management, business support and rental services | |
| Technical and vocational training institutes | |
| Computer training institutes | |
| Social welfare services | |
| Repair of personal and household goods | |
| Creative and arts-related services | |
| Libraries, historic sites and similar recreation-related services | |
| Sports services |
National Tax Service: under the tax law amendment, for those employed on or after '25.2.28., customs clearance under the Licensed Customs Brokers Act, virtual asset trading and brokerage, veterinary services and real estate leasing are excluded from the eligible industries. (S1)
4. Excluded workers
Enforcement Decree Article 27(2). (S3)
| Excluded | Original text |
|---|---|
| Executives | Executives |
| Largest shareholders, etc. | The largest shareholder or largest investor (the representative of a sole proprietorship) and their spouse |
| Relatives | Their lineal ascendants and descendants (including spouses) and relatives |
| Day workers | Day laborers |
| Premium payment | A person for whom payment of National Pension contributions and health insurance employee subscriber premiums cannot be confirmed (excluding those exempt from enrollment) |
National Tax Service: "Workers who are executives or largest shareholders of the company, or who are specially related persons such as their spouses or children, are excluded." (S1)
The National Pension and health insurance boxes give only this reduction's exclusion requirement.
5. Application documents, channel and timing
| Who | Document | Submitted to | Timing | Source |
|---|---|---|---|---|
| Worker | Application for income tax reduction for SME employees (Enforcement Rule Form No. 11) | Withholding agent (the company) | By the last day of the month following the month containing the date of employment | [S3] [S4] |
| Withholding agent | Statement of persons eligible for income tax reduction for SME employees (Form No. 11-2) | Head of the tax office with withholding jurisdiction | By the 10th of the month following the month in which the application was received | [S2] [S3] [S1] [S5] |
| Worker who has left | Reduction application | Head of the tax office with jurisdiction over the worker's address | The statutory wording is "may." No separate deadline figure in Article 30(2) | [S2] |
Enforcement Decree Article 27(5): "The application for reduction, with documents proving the period of military service and the like attached, shall be submitted to the withholding agent by the last day of the month following the month containing the date of employment." (S3)
Example from Easy-to-Find Everyday Law Information: employed 2025.4.1. → 2025.5.31. (S9)
Whether it can be submitted after the deadline: [source needed].
Documents to attach to Form No. 11. (S4)
- One copy of a document proving the period of military service
- One copy of the disability registration card (booklet, welfare card)
- One copy of the earned income withholding receipt issued under Article 143 of the Income Tax Act (limited to cases where a youth or other person who received the SME employment reduction under Article 30 of the Restriction of Special Taxation Act is employed by another SME or re-employed by the same SME)
Act Article 30(3): "shall submit the list of workers who applied to the head of the tax office with withholding jurisdiction by the 10th of the month following the month in which the application was received." (S2)
National Tax Service: "The company submits the statement of income tax reduction for SME employees to the tax office." (S1)
Withholding: "From the month following the month in which the application for reduction is received, the withholding agent … may withhold income tax on each month's earned income by applying the reduction rate under Article 30(1) of the Act." (S3)
Where there is global income, the reduced tax is capped at 2 million won per taxable period. The full calculation formula is in Enforcement Decree Article 27(8). (S3)
Hometax: https://www.hometax.go.kr (National Tax Service shortcut). (S1, S7)
Form downloads: National Tax Service main forms. (S5)
Hometax menu click path: [source needed].
6. Changing jobs and returning to work
Only the statutory wording is given.
| Box | Original text | Source |
|---|---|---|
| Changing jobs, re-employment, succession of employment | The income tax reduction period is counted from the first date of employment on which the income tax reduction was received, regardless of whether the person who received the reduction is employed by another SME or re-employed by the same SME, or whether employment is succeeded to another SME through a merger, division, business transfer or the like | [S2] |
| Returning to work after military service | Where a youth returns, within 1 year after completing military service prescribed by Presidential Decree, to the SME where they worked before that service, it means the day 2 years from the date of return, and where the date of return is not more than 5 years after the first date of employment, it means the day 7 years from the first date of employment | [S2] |
| Application on re-employment | Attach the withholding receipt. The start and end dates are the period on the first reduction application | [S4] |
7. National Tax Service requirements table
This is the framework of the National Tax Service table. The focus of this post is the youth row. The other rows are in the same table, so they are kept on this one sheet only. (S1, S2, S3)
| Category | Requirements (original text) | Reduction period | Reduction rate | Reduction cap |
|---|---|---|---|---|
| Youth | Aged 15 or older and 34 or younger as of the date the employment contract is signed. Includes a person whose age, calculated by subtracting the period of military service (up to 6 years) from the age on the signing date, is 34 or younger. Military service: active-duty enlisted soldiers (including full-time reservists, conscripted police and conscripted firefighters), social service personnel, active-duty officers, warrant officers and non-commissioned officers | Until the month containing the day 5 years from the date of employment | 90/100 of the income tax | 2 million won per taxable period |
| Older workers | Aged 60 or older as of the date the employment contract is signed | Until the month containing the day 3 years from the date of employment | 70/100 | 2 million won per taxable period |
| Persons with disabilities | Persons with disabilities covered by the Act on Welfare of Persons with Disabilities; wounded persons under the Act on the Honorable Treatment of and Support for Persons of Distinguished Service to the State; persons injured in the May 18 Democratization Movement under Article 4, item 2 of the Act on the Honorable Treatment of Persons of Distinguished Service to the May 18 Democratization Movement and Establishment of Organizations; Agent Orange sequelae patients who have been assessed a disability grade | Until the month containing the day 3 years from the date of employment | 70/100 | 2 million won per taxable period |
| Workers returning after a career break | Act Article 29-8(2). National Tax Service table: (1) worked continuously for 1 year or more at the same company for wages (2) left for reasons of marriage, pregnancy, childbirth, childcare, children's education or family care (3) 2 to less than 15 years since the date of leaving (4) not the largest shareholder (largest investor, representative) of the SME or a person specially related to them. Form (amended 2025.6.30.): "workers returning after a career break" | Until the month containing the day 3 years from the date of employment | 70/100 | 2 million won per taxable period |
For persons aged 60 or older and persons with disabilities, the employment period is from 2014.1.1. to 2026.12.31. (S2)
8. Channel URLs
| Channel | URL | What it does |
|---|---|---|
| National Tax Service tailored guide "Income tax reduction for SME employees" | https://www.nts.go.kr/nts/cm/cntnts/cntntsView.do?cntntsId=239023&mi=40632 | Requirements table, application deadline, excluded industries, application guidance |
| National Tax Service main forms | https://www.nts.go.kr/nts/na/ntt/selectNttInfo.do?mi=135790&nttSn=1002188 | Download Form No. 11 and No. 11-2 |
| Restriction of Special Taxation Act Article 30 | https://www.law.go.kr/LSW/lsLawLinkInfo.do?chrClsCd=010202&lsId=001584&lsJoLnkSeq=1000852480&print=print | Name, employment deadline, rate, period and cap, first date of employment, returning to work, application |
| Enforcement Decree of the same Act, Article 27 | http://www.law.go.kr/lsLawLinkInfo.do?chrClsCd=010202&lsJoLnkSeq=1000176487 | Definition of youth and military service, excluded workers, industries, application deadline, cap |
| Form No. 11 | https://www.law.go.kr/flDownload.do?bylClsCd=110202&flSeq=153612713&gubun= | Reduction application |
| Framework Act on Small and Medium Enterprises Article 2 | https://www.law.go.kr/LSW/lsLinkCommonInfo.do?ancYnChk=&chrClsCd=010202&lsJoLnkSeq=1018459511 | Definition of the company |
| Hometax | https://www.hometax.go.kr/ | Channel URL. Menu click path: [source needed] |
Sources
- [S1] National Tax Service tailored guide "Income tax reduction for SME employees". https://www.nts.go.kr/nts/cm/cntnts/cntntsView.do?cntntsId=239023&mi=40632
- [S2] Restriction of Special Taxation Act Article 30 (effective 2026.1.1. / Act No. 21223). https://www.law.go.kr/LSW/lsLawLinkInfo.do?chrClsCd=010202&lsId=001584&lsJoLnkSeq=1000852480&print=print
- [S3] Enforcement Decree of the Restriction of Special Taxation Act Article 27 (effective 2026.7.1., Presidential Decree No. 36423). http://www.law.go.kr/lsLawLinkInfo.do?chrClsCd=010202&lsJoLnkSeq=1000176487
- [S4] Enforcement Rule of the Restriction of Special Taxation Act, Form No. 11 (amended 2025.6.30.). https://www.law.go.kr/flDownload.do?bylClsCd=110202&flSeq=153612713&gubun=
- [S5] National Tax Service main forms — Restriction of Special Taxation Act Form No. 11 reduction application / Form No. 11-2 statement of eligible persons. https://www.nts.go.kr/nts/na/ntt/selectNttInfo.do?mi=135790&nttSn=1002188
- [S6] Framework Act on Small and Medium Enterprises Article 2. https://www.law.go.kr/LSW/lsLinkCommonInfo.do?ancYnChk=&chrClsCd=010202&lsJoLnkSeq=1018459511
- [S7] Hometax. https://www.hometax.go.kr/
- [S8] Restriction of Special Taxation Act Article 91-20 (youth long-term collective investment securities savings). https://law.go.kr/lsLinkCommonInfo.do?lsJoLnkSeq=1022566037
- [S9] Easy-to-Find Everyday Law Information — income tax reduction for youth employed at SMEs. https://www.easylaw.go.kr/CSP/CnpClsMainBtr.laf?ccfNo=3&cciNo=1&cnpClsNo=1&csmSeq=1658&menuType=onhunqna&popMenu=ov