key economic policy changes in 2026
the new year of 2026 brings with it some big changes to policies that directly affect our lives. From the minimum wage to insurance premiums to tax breaks, there's a lot to keep track of.
the $1.32 minimum wage
in 2026, the minimum wage will be 1,320 won ($1,320), a 2.9% increase from the previous year. A 40-hour workweek will bring your monthly salary to 2,566,880 won ($2,568.80), including weekly vacation pay, an increase of about 100,000 won. The daily limit for job search benefits has also increased from 66,000 won to 68,100 won.
insurance premium increases
however, if you don't get a big salary increase, you may actually see a decrease in your real salary. The national pension insurance premium rate has increased from 9% to 9.5%, which means your premium will increase by 7,700 won a month based on an average monthly income of 3.09 million won. The health insurance premium rate has also increased from 7.09% to 7.19%, the first increase in three years.
employee policy changes at a glance
Save on transportation with the K-Pass All Card
if you use public transportation frequently, the K-Pass All-in-One Card is for you. it's a system that reimburses you 100% of your transportation expenses if they exceed a certain threshold. Adults in the Seoul metropolitan area can use unlimited public transportation for 62,000 won per month, while those who use expensive transportation such as the GTX and wide-area buses can pay 100,000 won per month.
increased maternity leave pay
the maximum salary for maternity leave has been raised from 2.1 million won to 2.2 million won per month in three years. The spousal maternity leave salary has also been increased from 1.676 million won to 1.684 million won. The child allowance has also been expanded from under 8 to under 9 years old.
piloting the 4.5-day workweek
the government, public institutions, and some companies are piloting the 4.5-day workweek. IBK will shorten the workweek by one hour on Wednesdays and Fridays, and NH Bank will shorten the workweek by one hour on Fridays.
childcare tax benefits at a glance
expanded childcare allowance tax-free limit
the tax-free limit for childcare allowance has been expanded to 200,000 won per child per month. If you have two children under the age of 6, you can receive a tax-free benefit of up to 400,000 won per month, saving you about 360,000 won per year. There is no limit on the number of children, so the benefits are greater for families with multiple children.
expanded credit card deduction
the credit card deduction limit has also been increased depending on the number of children. For those with a gross salary of KRW 70 million or less, the deduction will be increased from KRW 3 million to KRW 500,000 per child, up to a maximum of KRW 1 million. If you have two children, you will receive an additional tax benefit of about KRW 150,000.
expanded deduction for fine arts school fees
the tax deduction for arts and crafts has been expanded to include children under the age of 9. Children in the lower grades of elementary school can also receive a 15% tax deduction for taekwondo, art, and music.
10-hour workday for parents
employees of small and medium-sized enterprises with children under the age of 12 or 6th grade can delay their work hours by one hour per day without losing wages. Business owners will receive 300,000 won per month per employee.
financial policies for the financially savvy
separate taxation of dividend income
dividend income separation tax has been introduced for dividend income from high-dividend publicly traded companies. Previously, financial income exceeding KRW 20 million per year was taxed at up to 45%, but from this year, dividend income is calculated separately and the tax rate has been reduced to 30%.
youth Future Savings Plan Coming Soon
the Youth Future Savings Fund, which is scheduled to launch in June of this year, is a policy financial product that replaces the Youth Leapfrog Account and allows you to save up to 500,000 won per month for three years to save up to 20 million won.
Reduce foreign stock transfer taxes with an RIA account
if you're a U.S. stock investor, consider utilizing an RIA, which is a domestic market return account. With an RIA, you can sell your overseas stocks and invest in domestic stocks for at least a year to save up to KRW 50 million in capital gains taxes. You can get 100% for the first quarter, 80% for the second quarter, and 50% for the second half of the year.
frequently Asked Questions
Q. what will be the minimum wage in 2026?
A. The minimum wage in 2026 will be KRW 1,320 per hour. Based on a 40-hour workweek, your monthly salary will be approximately KRW 2,216,880 including weekly vacation pay.
Q. How much does the K-Pass cost for both cards?
A. It costs 62,000 won per month for an adult in the Seoul metropolitan area, and 100,000 won per month for a GTX or local bus pass, which gives you unlimited rides on public transportation.
Q. what happened to the tax-free limit for childcare allowance?
A. It has been expanded to 200,000 won per child per month. There is no limit on the number of children, so the more children you have, the more tax-free benefits you will receive.
Q. when will the Youth Future Savings Plan be launched?
A. It will be launched in June 2026. If you pay up to 500,000 won per month for three years, you can save more than 20 million won.
Q. What are the benefits of the RIA account transfer tax reduction?
A. You can receive a capital gains tax reduction of 100% in the first quarter, 80% in the second quarter, and 50% in the second half of the year when the domestic stock market returns, up to a maximum of KRW 50 million.
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if you take advantage of the changes in 2026, you can save money and save taxes, especially if you have children, you should check out the tax-free childcare allowance and the expanded credit card deduction.
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