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Your first Korean payslip (급여명세서) is likely to look different from what you’ve seen before. Several mandatory deductions appear before any optional items, and the amounts can be surprising — especially if you weren’t expecting National Pension or health insurance costs. This guide explains each deduction, what’s mandatory for foreigners, and what to check immediately if something looks wrong.
1. The Four Mandatory Deductions
1. Income Tax (소득세, So득세)
Korean income tax is withheld monthly based on a simplified withholding table (간이세액표). The monthly amount is an estimate based on your annual gross salary and declared dependents — it’s reconciled at year-end through 연말정산 (the February tax settlement).
- Progressive rates: 6%–45% depending on annual taxable income Source: National Tax Service (NTS, 국세청), 2026
- Monthly withholding is approximate — you may receive a refund or owe additional tax in February
- Check your payslip to confirm the withholding matches your salary band
2. Local Income Tax (지방소득세)
A flat 10% surcharge applied to the income tax amount. If your monthly income tax withholding is ₩300,000, your local income tax is ₩30,000. This is automatically calculated — no separate action required.
3. National Health Insurance (건강보험, NHI)
Employee contribution rate: 3.545% of monthly gross salary (2026 rate). Your employer matches this amount. Source: National Health Insurance Service (NHIS, 국민건강보험공단), 2026
- Monthly example: ₩5,000,000 gross → ₩177,250 employee contribution
- Plus Long-term Care Insurance (장기요양보험): 0.9182% of your NHI premium → adds approximately ₩16,000–20,000/month at this salary Source: National Health Insurance Service (NHIS, 국민건강보험공단), 2026
- April True-Up: In April, NHI reconciles your previous year’s total income (including bonuses) against what was paid monthly. If you received large bonuses, April’s paycheck will include a catch-up deduction. Plan for this.
4. National Pension (국민연금, NPS)
Employee contribution rate: 4.5% of monthly gross salary, capped at a monthly salary of ₩6,170,000 (2026 ceiling). Source: National Pension Service (NPS, 국민연금공단), 2026
- If your monthly gross is ₩6,170,000 or higher, your NPS contribution is capped at ₩277,650/month Source: National Pension Service (NPS, 국민연금공단), 2026
- Your employer contributes an equal 4.5%
- Foreign nationals from countries with a Social Security totalization agreement with Korea may be exempt from NPS. Countries with agreements include: US, Canada, UK, Germany, Australia, China, and others. Check the NPS website for the current list.
- To claim exemption: submit the 외국인 국민연금 적용 제외 신청서 to your employer’s HR; they file with NPS on your behalf
2. The Employment Insurance Question (고용보험)
Employment Insurance (고용보험) is technically mandatory for most employees — but with a critical carve-out that many foreign workers miss:
- General rule: 0.9% employee contribution on monthly gross Source: Ministry of Employment and Labor (고용노동부), 2026
- Exemption for many foreign visa holders: Workers on E-2 (English teacher), E-3 (researcher), E-4 (technology transfer), E-5 (professional), E-7 (special occupation), and some other visa categories are not eligible for employment insurance benefits under Korean law — and therefore should not have the premium deducted
- If Employment Insurance appears on your payslip and you hold an exempt visa: contact HR immediately to request a refund and stop the deduction going forward
- E-9 (non-professional employment) and H-2 (overseas Korean) workers: generally are enrolled and the premium is mandatory
This is one of the most common payroll errors for foreign workers in Korea. Many HR departments at smaller companies apply the deduction by default without checking visa-specific rules. Check your payslip on day one.
3. Reading Your Payslip
A typical Korean payslip (급여명세서) is structured as:
| Section | Korean Label | What It Shows |
|---|---|---|
| Earnings | 지급 내역 | Base salary, bonuses, overtime, meal allowances, transportation allowances |
| Deductions | 공제 내역 | Income tax, local tax, NHI, NPS, EI, any loan repayments |
| Gross pay | 지급 총액 | Total before deductions |
| Total deductions | 공제 총액 | Sum of all deductions |
| Net pay | 실 지급액 | What hits your bank account |
4. Non-Taxable Allowances
Some components of Korean compensation are partially or fully non-taxable, which is why employers often structure packages to include them:
- Meal allowance (식대): Up to ₩200,000/month non-taxable (increased from ₩100,000 in 2023) Source: National Tax Service (NTS, 국세청), 2026
- Transportation allowance (자가운전보조금): Up to ₩200,000/month non-taxable for employees using personal vehicles Source: National Tax Service (NTS, 국세청), 2026
- Childcare subsidy (보육수당): Up to ₩200,000/month non-taxable for employees with children under age 6
These allowances appear in the earnings section but are excluded from the taxable base for income and NPS calculations. Confirm with your employer how your package is structured.
5. Year-End Settlement (연말정산) Preview
The monthly withholding is not your final tax liability. Each February, your employer runs 연말정산:
- Annual income and deductions are totaled
- Medical expenses, education costs, insurance premiums, credit card spending, and dependents are applied as deductions/credits
- The difference between what was withheld and what you actually owe is refunded or collected
- For most single employees without major deductions: a small refund (₩100,000–500,000) is typical
- For employees with dependents, large medical expenses, or mortgage interest: significantly larger refunds are possible
Frequently Asked Questions
Q: My Employment Insurance contribution is ₩50,000/month and I’m on an E-7 visa. Is this correct?
A: Probably not. Most E-7 visa holders are not eligible for employment insurance benefits and should not have the premium deducted. Raise this with HR immediately — request a correction and refund of past overpayments (recoverable for the current year).
Q: The NPS deduction seems very high. Can I opt out?
A: Only if you’re from a country with a totalization agreement with Korea. Otherwise, NPS enrollment is mandatory. The amount is capped at ₩277,650/month regardless of how high your salary is above the cap.
Q: Why did my April paycheck look so much smaller?
A: The NHI April true-up. Your health insurance premiums are recalculated based on the previous year’s total income (including bonuses). If you received OPI or RSU income in January–February that exceeded expectations, April catches up the difference in a single deduction. This is a known annual event — budget for it.
Q: My gross is ₩5M but my net is only ₩4M. Is this normal?
A: At ₩5M monthly gross (~₩60M annual), total deductions of approximately ₩800,000–1,000,000 are normal, leaving ~₩4.0–4.2M net. The specific breakdown: income tax ~₩150K, local ~₩15K, NHI ~₩177K + long-term care ~₩16K, NPS ~₩225K, EI (if applicable) ~₩45K.
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Key Resources
- NPS exemption for foreigners: nps.or.kr (국민연금공단)
- Employment Insurance visa eligibility: ei.go.kr (고용보험)
- NTS withholding table (간이세액표): nts.go.kr