[Ki Ha-young's Life Card] 80% Income Tax Deduction on Cards Until June... "Check Your Deduction Limit"

Food and Accommodation Sectors Affected by COVID-19
Card Income Deduction Rate Raised to 80% from April to June
Card Deduction Limit Remains Unchanged...Check Benefits

[Asia Economy Reporter Ki Ha-young]Is there anyone these days without at least one credit card? In modern society, anyone can have a card if they want. Credit cards have brought unparalleled convenience to daily life. Now, wherever you go, you can easily see people paying with credit cards or smartphones. As demand has increased, cards with various benefits are being released almost daily. Accordingly, Asia Economy delivers various stories related to cards, which are inseparable from our consumer life, through the weekly 'Cards in Daily Life' corner, from introducing new cards to industry behind-the-scenes and guides for card beginners.

Income deduction rate for card usage expanded up to 80% until June.

As consumption has frozen due to the spread of the novel coronavirus disease (COVID-19), the government is introducing various consumption stimulus measures. One of them is the expansion of the card income deduction rate. On the 8th, at the 4th Emergency Economic Meeting, the government raised the income deduction rate for credit and check cards to 80% for April to June.

The 80% income deduction rate applies to industries affected by COVID-19. These include food and lodging, tourism, performance-related businesses, and passenger transportation. For example, if you purchase airline tickets, travel packages, or performance tickets with a credit card by June, you can get back up to 80% of the payment amount.

If the industry is not affected by COVID-19, income deductions are 30% for credit cards and 60% for check cards. For four months from March to June, the deduction rate has been temporarily doubled from the existing rates of 15% for credit cards and 30% for check cards. Income deduction rates for traditional markets or public transportation usage are also deductible up to 80%, the same as COVID-19 affected industries.

Although the deduction rate is high and the benefits seem large, there is a point to note. The card deduction limit remains the same. Employees with a total annual salary of 70 million KRW or less can only get deductions up to a maximum of 3 million KRW. This means that even if you increase consumption due to the high deduction rate, the amount of benefits you can receive is fixed. For those with total annual salaries exceeding 70 million KRW up to 120 million KRW, the maximum deduction is 2.5 million KRW, and for those exceeding 120 million KRW, it is 2 million KRW.

Also, there is a minimum usage amount for card income deductions. Only the amount spent exceeding 25% of the total annual salary is eligible for deduction. For example, if an employee earns 50 million KRW a year, they must spend at least 12.5 million KRW to receive card income deduction benefits.

Ultimately, to benefit from this card income deduction rate, you need to know your usual consumption scale. If you are planning to get married this year or have plans for a large expenditure, you can maximize income deduction benefits by using cards in the first half of this year. However, expenses such as new car purchases, communication fees, taxes and public charges, apartment management fees, car lease fees, and amounts paid overseas are excluded from credit card income deductions.

On the other hand, if you are a thrifty person who usually spends less than 25% of your total annual salary, there is no need to increase consumption to receive income deductions. Also, if you have always fully utilized the income deduction limit to get benefits, you will not receive additional benefits just because the deduction rate has increased this time. If you thought about using your card more due to the increased deduction rate in the first half of this year, it would be better to review your spending habits once again first.

This content was produced with the assistance of AI translation services.