Get Up to 1 Million KRW Additional Income Deduction for Using Credit Cards Extensively This Year

Credit Card

[Asia Economy Reporter Kwangho Lee] If you increase your credit card spending by more than 5% compared to last year, you can receive up to an additional 1 million KRW in income tax deductions.

The Ministry of Economy and Finance announced a revision to the Restriction of Special Taxation Act containing this provision on the 5th.

When the government announced this year's economic policy direction last December, it stated that, to stimulate domestic demand, a separate income deduction would be provided for the increase in credit card usage this year.

The newly applied credit card income deduction by the government adds a 10% deduction rate on the portion of credit card spending that exceeds last year's amount by more than 5%.

The current credit card income deduction applies a deduction rate of 15-40% on credit card spending exceeding 25% of total salary. Credit cards receive a 15% deduction rate, cash receipts and debit cards 30%, and traditional markets and public transportation usage 40%.

Applying an additional 10% deduction rate on the increased spending can raise the deduction rate from the existing 15-40% to 25-50%.

Specifically, the current credit card income deduction limits are up to 3 million KRW for those earning 70 million KRW or less, up to 2.5 million KRW for those earning between 70 million and 120 million KRW, and up to 2 million KRW for those earning over 120 million KRW. Adding an additional 1 million KRW limit increases the deduction cap from the existing 2-3 million KRW to 3-4 million KRW.

The government plans to submit this bill revision to the National Assembly by the end of this month. If passed, it will be applied starting from the year-end tax settlement for this year's income.

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