How does South Korea payroll tax work in 2026?
The National Pension rate rose to 4.75% per side from January 2026 and will keep rising every year until 2033. That is the most employer-relevant payroll change in Korea in a decade. Add health insurance, employment insurance, and an eight-bracket income-tax scale that reaches 49.5% at the top, and the payroll stack has more moving parts than most new entrants expect.
· South Korea guide
Illustration · Seoul, South Korea
Employer social insurance in South Korea has four parts. National Pension (NPS): 4.75%. National Health Insurance (NHI, including long-term care): approximately 4.07%. Employment Insurance: from 1.15% depending on company size. Workers Compensation: varies by industry. Total employer social insurance is roughly 10.69% for a typical white-collar employer, but the exact figure varies.
The employee pays NPS at 4.75%, NHI at approximately 4.07%, and Employment Insurance at 0.9%. Income tax uses eight progressive brackets from 6% to 45%. A local income tax surtax of 10% on the national tax brings the combined top rate to 49.5%.
Payroll runs monthly. Withheld income tax must reach the tax authority by the 10th of the following month. The minimum hourly wage is KRW 10,320.00/hour in 2026, giving a monthly floor of KRW 2,156,880 based on 209 standard hours.
What does an employer pay in South Korea social insurance?
Employer social insurance in South Korea covers four programmes. The main ones are National Pension at 4.75%, National Health Insurance (including long-term care) at approximately 4.07%, and Employment Insurance at a minimum of 1.15%.
Workers Compensation Insurance is also employer-paid. Its rate depends on industry. A white-collar employer typically pays a combined employer social insurance rate of around 10.69%, but each company should calculate its exact figure by programme.
| Programme | Employer rate | Note |
|---|---|---|
| National Pension (NPS) | 4.75% | Rising annually; monthly wage ceiling KRW 6,370,000 |
| National Health Insurance (NHI + long-term care) | approx 4.07% | NHI base rate 7.19% total; long-term care adds 13.14% of the NHI contribution |
| Employment Insurance | 1.15% to 1.75% | Rate varies by company size and type; base rate 1.15% |
| Workers Compensation Insurance | Industry-dependent | Ranges from 0.56% to 18.56%; set by the Ministry of Employment and Labor |
National Pension: a rising rate through 2033
South Korea enacted a pension reform in 2025 that increases the NPS contribution rate by 0.5 percentage points per year. The 2026 rate is 4.75% per side (up from 4.5% in 2025). The rate will continue rising until the combined rate reaches 13% by 2033. Employers hiring in South Korea for a multi-year period should budget for this annual step-up. The monthly wage ceiling for NPS contributions adjusts each July; the figure for January to June 2026 is KRW 6,370,000.
National Health Insurance in 2026
The NHI base rate for 2026 is 7.19% of salary, up from 7.09% in 2025. The employer pays half: 3.595%. Long-term care insurance (LTCI) adds 13.14% of the NHI contribution, giving a combined NHI plus LTCI employer rate of approximately 4.07% per side. The combined rate applies on all salary up to a monthly premium cap; individual caps are published by the National Health Insurance Service each year.
What does an employee pay in South Korea social insurance?
An employee pays National Pension at 4.75%, National Health Insurance (including long-term care) at approximately 4.07%, and Employment Insurance at 0.9%.
The NPS deduction is capped at KRW 302,570 per month for January to June 2026, based on the KRW 6,370,000 monthly wage ceiling. Earnings above that ceiling attract no further NPS deduction for the period.
| Programme | Employee rate | Note |
|---|---|---|
| National Pension (NPS) | 4.75% | Cap: KRW 302,570/month (Jan to Jun 2026); ceiling resets in July |
| National Health Insurance (NHI + long-term care) | approx 4.07% | Equal split with employer; monthly premium cap applies |
| Employment Insurance | 0.9% | Applied to total wages; no ceiling |
The combined employee deduction for social insurance is approximately 7.36% for a typical white-collar worker below the NPS wage ceiling. Workers above the ceiling pay a lower effective rate on the excess because the NPS deduction is capped while NHI and EI continue to apply.
South Korea does not have a statutory paid sick leave scheme. Employees absent for medical reasons typically draw on their annual leave entitlement or employer sick pay where the contract provides it. This is a common gap for foreign employers used to mandatory sick pay regimes.
South Korea income tax bands for 2026
South Korea uses eight progressive income tax bands from 6% to 45%. A local income tax surtax of 10% applies on top of the national rate, so the combined top rate is 49.5%.
South Korea does not have a zero-rate personal allowance band in the way some countries do. Instead, residents may deduct KRW 1,500,000 per year as a basic personal deduction from their taxable income. Income below the first bracket threshold is still taxed at 6% after any available deductions.
| Taxable income (KRW) | National rate | Combined rate (with 10% local surtax) |
|---|---|---|
| Up to KRW 14,000,000 | 6% | 6.6% |
| KRW 14,000,001 to KRW 50,000,000 | 15% | 16.5% |
| KRW 50,000,001 to KRW 88,000,000 | 24% | 26.4% |
| KRW 88,000,001 to KRW 150,000,000 | 35% | 38.5% |
| KRW 150,000,001 to KRW 300,000,000 | 38% | 41.8% |
| KRW 300,000,001 to KRW 500,000,000 | 40% | 44% |
| KRW 500,000,001 to KRW 1,000,000,000 | 42% | 46.2% |
| Above KRW 1,000,000,001 | 45% | 49.5% |
The local income tax surtax
Korea's local income tax is levied at 10% of the national personal income tax liability. It is not a flat percentage of income. It applies bracket by bracket, so the combined effective rates shown above are exact for each band. The local surtax is filed separately with the local government but collected through the same payroll withholding process.
Year-end tax settlement (yeonmal jeongsan)
Korea does not use a self-assessment system in the UK sense. Monthly withholding is based on an estimated tax. Every February, employers run a year-end settlement process, recalculating the true annual income tax for each employee after applying all deductions and credits. Any over-withheld tax is refunded via payroll; any under-withheld amount is collected. This settlement is part of the standard payroll calendar and Teamed handles it as part of the regular payroll service.
How does Korean payroll filing work?
South Korea uses monthly payroll. Employers must withhold income tax and local income tax from each payment and remit the withheld amounts to the National Tax Service by the 10th of the following month.
Social insurance contributions (NPS, NHI, Employment Insurance) are also remitted monthly by the 10th. Each programme has its own payment channel. The Workers Compensation Insurance premium is an annual payment assessed by the Ministry of Employment and Labor.
NHI contributions for each payroll month are due by the 10th of the following month. The 2026 NHI rate is 7.19% of monthly salary, split equally between employer and employee. Long-term care insurance adds 13.14% of the NHI contribution per side.
Source: National Health Insurance Service: Contribution Rate (English)
The Korean payroll filing calendar:
- By the 10th of the following month: remit withheld income tax and local income tax to the National Tax Service (NTS)
- By the 10th of the following month: pay NPS contributions for the prior payroll month
- By the 10th of the following month: pay NHI and LTCI contributions for the prior payroll month
- By the 10th of the following month: pay Employment Insurance contributions
- February each year: complete the year-end tax settlement (yeonmal jeongsan) for all employees and issue amended payslips
- March each year: file the annual withholding tax return with the NTS
Small employers (those paying total tax withheld below a threshold set by the NTS) may apply to remit withholding tax semi-annually rather than monthly. This is an optional simplification; the standard rule is monthly by the 10th.
-
Confirm pay data before cut-off
Collect salary, overtime, bonuses, and any benefits for the month. Verify that no payment falls below the minimum wage floor.
-
Calculate gross and withhold income tax
Apply the eight-bracket national income tax scale and the 10% local surtax to the employee's estimated annual income, prorated to the month. Deduct the employee's share of NPS, NHI, and Employment Insurance.
-
Calculate employer social insurance
Add 4.75% NPS, approximately 4.07% NHI plus long-term care, and the applicable Employment Insurance rate. Check whether the NPS wage ceiling applies this month.
-
Pay net salary to employee
Transfer the net amount on the last working day of the month. The Labor Standards Act requires wages to be paid at regular intervals at least once per month.
-
Remit all social insurance by the 10th
Pay NPS, NHI, and Employment Insurance contributions to each programme's collection account. Remit withheld income tax and local income tax to the National Tax Service by the 10th of the following month.
National Pension and social insurance in the payroll stack
National Pension (NPS) is the mandatory pension and social insurance programme in South Korea. Both employer and employee each pay 4.75% in 2026. This replaced the previous rate of 4.5% per side from 1 January 2026.
The NPS rate will rise by 0.5 percentage points per year until the combined rate reaches 13% (6.5% per side) by 2033. Employers with multi-year headcount in South Korea must plan for these annual increases.
How the NPS rate rise affects employer cost over time:
| Year | NPS rate (each side) | Combined NPS rate |
|---|---|---|
| 2025 | 4.5% | 9.0% |
| 2026 | 4.75% | 9.5% |
| 2027 onwards | Rising 0.25pp per side per year | Rising to 13% combined by 2033 |
The NPS applies on monthly salary up to a wage ceiling. For January to June 2026 the ceiling is KRW 6,370,000 per month. The ceiling is reviewed each July by the National Pension Service and typically increases with average wage growth. The maximum monthly NPS contribution per side for this period is KRW 302,570.
Korea does not have a separate occupational pension auto-enrolment system
Unlike the UK, South Korea does not have a voluntary auto-enrolment tier sitting alongside the mandatory NPS. There is a separate Retirement Benefit (퇴직급여) system under the Guarantee of Workers Retirement Benefits Act, but this is a severance reserve rather than a pension contribution: the employer must set aside the equivalent of one month of average wages per year of service for each employee, payable as a lump sum on departure. Teamed holds this reserve on your behalf and releases it on termination. It is not part of the monthly social insurance stack.
National minimum wage 2026
The minimum hourly wage is KRW 10,320.00/hour from 1 January 2026, up 2.9% from 2025. The monthly minimum based on 209 standard hours is KRW 2,156,880. The minimum applies to all workers including part-time, temporary, and foreign employees. All social insurance contributions are calculated on the actual wage paid, which must be at or above this floor.
How does Teamed handle South Korea payroll for you?
Teamed becomes your legal employer of record in South Korea for from $599 per employee per month, with zero FX mark-up in any currency.
Payroll, social insurance, and the full Korean employment law stack run on one platform.
Real HR and legal experts handle your South Korea hires, from the first offer letter through every monthly social insurance filing and the February year-end settlement. An actual person, not a chatbot or a pooled queue. There is no setup fee and no exit fee. Employer cost passes through at cost, itemised on every invoice.
EOR payroll, contractor onboarding, and entity setup all live on one platform. A Korea contractor who converts to direct employment keeps their record. That same employee can graduate from EOR to your own Korean entity without switching systems. Run the Employer Cost Calculator to see the full picture. EOR is the right model for a first South Korea hire, until it isn't. Start from the South Korea hiring overview.
Key sources: National Health Insurance Service (NHIS), PwC Korea Tax Summaries, and Lockton: Korea NPS rate increases.
Frequently asked questions
What is the employer social insurance rate in South Korea in 2026?
Employer social insurance in South Korea has four parts. National Pension: 4.75%. National Health Insurance including long-term care: approximately 4.07%. Employment Insurance: 1.15% for most employers. Workers Compensation: set by industry, ranging from under 1% to over 18%. The combined rate for a typical white-collar employer is approximately 10.69%. The NPS rate will rise by 0.5 percentage points each year until 2033.
What social insurance does an employee pay in South Korea?
Employees pay National Pension at 4.75%, National Health Insurance (including long-term care) at approximately 4.07%, and Employment Insurance at 0.9%. The NPS deduction is capped on monthly wages above KRW 6,370,000. The combined employee deduction is approximately 7.36% for most workers.
What are the South Korea income tax bands in 2026?
South Korea has eight national income tax brackets: 6% up to KRW 14,000,000, 15% up to KRW 50,000,000, 24% up to KRW 88,000,000, 35% up to KRW 150,000,000, 38% up to KRW 300,000,000, 40% up to KRW 500,000,000, 42% up to KRW 1,000,000,000, and 45% above that. A 10% local income tax surtax applies, bringing the combined top rate to 49.5%.
How does payroll filing work in South Korea?
South Korea uses a monthly payroll cycle. Employers withhold income tax and remit it to the National Tax Service by the 10th of the following month. Social insurance contributions for NPS, NHI, and Employment Insurance are also due by the 10th. In February each year, employers run a year-end settlement (yeonmal jeongsan) to recalculate actual annual tax for each employee and process any refunds or top-ups.
What is the minimum wage in South Korea in 2026?
The national minimum hourly wage is KRW 10,320.00/hour from 1 January 2026, up 2.9% from 2025. The monthly minimum for a worker on standard hours (209 hours per month including the weekly holiday allowance) is KRW 2,156,880. The minimum applies to all workers, including part-time and fixed-term employees. All social insurance contributions are calculated on actual wages paid, which must meet or exceed this floor.
The NPS rate hike surprises every new entrant. Clients see the headline 4.75% and think it is a one-off. It is not. It rises every year through 2033. We model the full eight-year curve into every Korea cost estimate so clients are not recalculating their headcount budget every January.
South Korea's pension rate rose to 4.75% per side in January 2026. It rises again next year. And the year after that.
The NPS step-up, health insurance, and an eight-band income tax reaching 49.5% combined add up fast.
Run the numbers now. They will be different next year.
