Saving More Money: Special Tax Credits for Education, Medical, and Insurance

1) Why tax credits are powerful

Income deductions shrink your tax base before rates apply. Tax credits subtract from the calculated tax itself—often more valuable at the same amount.

Mnemonic: Deduction = “shrink the pie.” Credit = “cut the bill.”

2) Insurance premium tax credit

Scope: Coverage insurance premiums for the taxpayer and dependents.
Rates & ceilings:
- General coverage: 12% credit on deposits up to KRW 1,000,000/yr.
- For the disabled: 15% credit on deposits up to KRW 1,000,000/yr.

3) Medical expense tax credit

Threshold: Eligible when total family medical spend exceeds 3% of gross wages.
Credit rate: 15% on the amount exceeding the 3% threshold.
- Infertility treatment: 30%.
- Preterm/congenital infant care: 20%.
Ceilings / notes:
- For the taxpayer, age 65+, disabled, or ≤6 years old: broadly no ceiling.
- Other dependents: typical ceiling KRW 7,000,000.
- Important: Even if a dependent fails the KRW 1,000,000 income test for basic deduction, medical credit can still apply if you paid.

4) Education expense tax credit

15% credit on eligible tuition/fees.

Beneficiary	Eligible spend	Ceiling
Taxpayer	Graduate/college tuition, vocational training	Full amount
University student	Tuition etc.	KRW 9,000,000 per person
Preschool ~ High school	Tuition, admission, meals, after-school, uniforms (≤KRW 500k for MS/HS)	KRW 3,000,000 per person

5) Other key credits (child, birth/adoption, donation)

Child tax credit: For eligible children (age ≥8).
- 1 child: KRW 150,000, 2 children: KRW 350,000, 3rd+: +KRW 300,000 each.
Childbirth/adoption credit:
- 1st: KRW 300,000, 2nd: KRW 500,000, 3rd+: KRW 700,000.
Donation credit:
- Over KRW 100,000: generally 15%; over KRW 20,000,000: 30% (special rules for political funds).

Tip: Keep donation receipts with recipient type (designated, political, etc.) for correct limits/rates.

6) Wage & salary income tax credit

A final credit after all special credits—based on your calculated wage tax. Typical ceiling around KRW 740,000 for lower-wage brackets and phased down as income rises.

7) Common mistakes & quick checks

No threshold check: Medical credit claimed even when total spend ≤ 3% of wages.
Missed dependents link: Child credit not claimed despite eligibility (age test).
Wrong ceilings: Education/medical caps applied incorrectly per person.
Receipt gaps: Insurance/tuition/medical paid but no official proof → credit denied.

Checklist: Verify thresholds → apply per-person ceilings → attach official receipts → run a “before/after” preview in January.

8) Summary & next topic

Credits are stronger than deductions—subtract from the tax due.
Focus areas: insurance, medical, education + child/birth/adoption, donations.
Finish with the wage & salary income tax credit to maximize refunds.

Next (Part 15): Shifting to Local Taxes—Registration & Acquisition Taxes when you buy property.

9) Disclaimer

This post is for general information only and not legal/tax advice. Figures and scopes change by year; outcomes depend on your facts. Consult a qualified professional.

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Tax Credits Medical Expense Credit Education Credit Insurance Premium Credit Child Tax Credit Donation Credit Wage & Salary Tax Credit KRTaxPolicy Korean Taxation Series

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