Korea Employee Discount Tax | 20% of Market Price or KRW 2.4M Limit and Resale Dates

Plan by year: market total, limit, discount, tax-free, taxable, income tax, local tax, health, long-term care, employment insurance and extra cost
Year	Market total	Limit	Discount	Tax-free	Taxable	Income tax	Local tax	Health + LTC	Employment	Extra cost
2026	63,000,000 KRW	12,600,000 KRW	18,750,000 KRW	12,600,000 KRW	6,150,000 KRW	1,402,200 KRW	140,220 KRW	250,144 KRW	55,350 KRW	1,847,914 KRW

Timing scenarios: year split, tax-free, taxable benefit and extra cost
Scenario	Year per purchase	Tax-free	Taxable	Extra cost
As entered (your plan)	Passenger car 2026 · Refrigerator 2026	12,600,000 KRW	6,150,000 KRW	1,847,914 KRW
All in the first year	Passenger car 2026 · Refrigerator 2026	12,600,000 KRW	6,150,000 KRW	1,847,914 KRW
Best split over two years★ lowest cost	Passenger car 2026 · Refrigerator 2027	12,750,000 KRW	6,000,000 KRW	1,802,844 KRW

Per purchase: discount, goods type, restriction end, resale-from date and tax-free conditions
Purchase	Discount	Goods type	Restriction ends	Resale from	Conditions
Passenger car	18,000,000 KRW	Individual consumption tax goods (2 years)	2028-11-20	2028-11-21	Met
Refrigerator	750,000 KRW	Durable goods with a useful life over 5 years (2 years)	2028-12-10	2028-12-11	Met

Why to calculate the tax-free limit before an employee discount purchase

Working for a car, appliance or electronics maker in Korea often means buying company products far below the consumer price.
From 2025, Income Tax Act Article 20(1)6 made the benefit of buying below market price explicitly part of wage income.
Income Tax Act Article 12(3)(cheo) and Decree Article 17-5 then exempt it up to a limit, so a discount within the limit is tax-free and only the excess is added to total salary.

The catch is that the limit is “the larger of 20% of the year’s discounted market total and KRW 2.4 million”, so a 30% car discount or several purchases in one year can easily exceed it.
The excess raises year-end income tax and local income tax and pushes up the next year’s health and employment insurance settlement.
Reselling a car within two years can also break the conditions and make the whole discount taxable.

Enter each purchase’s market price, employee price and purchase date, and the calculator shows the tax-free limit and taxable benefit by year plus the increase in income tax, local income tax, health, long-term care and employment insurance.
It compares your plan, buying everything in the first year and the best split over two years, and lists the last restricted day and the resale-from date for each purchase.

This calculator is based on Korean rules: the 2026 Income Tax Act and Decree and Korean health, long-term care and employment insurance rates, with laws checked through the National Law Information OPEN API on 2026-10-29.
The defaults are a fictional example and do not represent actual withholding or a tax office decision.

Employee discount tax rules at a glance

What counts as wage income, the three tax-free conditions, the limit and the restriction periods are spread across the Act and the Decree as shown below.
If any of the three conditions is missing, that purchase’s discount is taxable in full regardless of the limit.

Employee discount: what is taxed, market price, tax-free conditions, limit, resale restriction, effective date and legal basis
Item	Rule	Basis	Key figure
What is taxed	The benefit of buying your employer’s or an affiliate’s goods or services below market price, or of a purchase subsidy	Income Tax Act Article 20(1)6; Decree Article 38(3)	—
Market price	Market price under Corporate Tax Act Article 52(2); the price you paid for damaged, spoiled or near-expiry items	Decree Article 38(4)	—
Tax-free conditions	(1) for your own consumption (2) resale not allowed during the restriction period (3) one standard applied to all employees	Income Tax Act Article 12(3)(cheo)	All 3
Tax-free limit	max(20% of the year’s discounted market total, KRW 2.4 million a year)	Decree Article 17-5(1)	20% · KRW 2,400,000
Resale restriction	Goods with a useful life over 5 years: 2 years · individual consumption tax goods: 2 years · other goods and services: 1 year	Decree Article 17-5(2)	2 · 2 · 1 years
Effective from	Income arising on or after January 1, 2025	Addenda of Act No. 20615, Article 4	2025-01-01

The 20% is applied to the market price of every good or service bought at a discount that year.
Because the Decree refers to “the combined market price of goods or services bought during the tax period”, the calculator adds up all discounted purchases of the year regardless of the conditions and applies the exemption, up to that limit, only to the discounts that meet the conditions.

Formula: from the tax-free limit to the extra cost

Step 1 — taxable discount benefit

Discount per purchase = max(0, market price − employee price)
Tax-free limit L = max(year’s market total × 20%, KRW 2,400,000)
Tax-free amount = min(discounts meeting the conditions, L); taxable benefit = total discount − tax-free amount

Step 2 — year-end income tax and local income tax

Apply the earned income deduction (Article 47, capped at KRW 20 million) to total salary G and to G + taxable benefit.
Tax base = earned income − other income deductions; computed tax = 6–45% basic rates (Article 55).
Determined tax = computed tax − wage tax credit (Article 59, capped at KRW 660,000 and falling above KRW 70 million of salary) − other credits.
Income tax increase = difference in determined tax; local income tax increase = difference in 10% of determined tax.

Step 3 — insurance settlement

Health insurance = taxable benefit × 3.595% (employee half of the 7.19% rate)
Long-term care insurance = taxable benefit × 0.4724% (half of the 0.9448% rate)
Employment insurance = taxable benefit × 0.9% (half of the 1.8% unemployment benefit rate)

After-tax discount rate = (total discount − extra cost) ÷ market total, and saving versus a regular purchase = regular prices − (employee prices + extra cost).
The national pension is left out because it reflects the higher pay only from the next July in the reference monthly income, which is capped.

How to use the calculator

Enter the purchases.
Add the item, the market price (normal consumer price), the employee price and, for comparison, the regular purchase price.
You can add up to eight purchases.
Choose the goods type and market price basis.
Passenger cars and other individual consumption tax goods and durable goods such as refrigerators and TVs with a useful life over 5 years are restricted for 2 years; other goods and services for 1 year.
For damaged goods or near-expiry stays, choose the rule that treats the price paid as the market price.
Enter the purchase date and any planned resale date.
The purchase year is the tax year, and a planned resale date shows whether the restriction would be broken.
Enter the company standard and your year-end figures.
Enter total salary before discounts, other income deductions and other tax credits, and tick the common standard and insurance options.
Compare the results.
Review the limit, taxable benefit and extra cost by year, the scenarios and each resale-from date, then save a TXT file with the checklist.

Fictional example 1: a car at 30% off and a refrigerator at 25% off

An employee of a car maker earns a total salary of KRW 80 million before discounts, with KRW 15 million of other income deductions and KRW 500,000 of other tax credits.
On 2026-11-20 they buy a car with a market price of KRW 60,000,000 for KRW 42,000,000, and on 2026-12-10 a refrigerator with a market price of KRW 3,000,000 for KRW 2,250,000.
The discounts are KRW 18,000,000 and KRW 750,000, KRW 18,750,000 in total, on a market total of KRW 63,000,000.

Extra cost by item in example 1, in KRW
Item	Extra cost (KRW)
Income tax (increase in determined tax)	1,402,200
Local income tax (10%)	140,220
Health insurance (3.595%)	221,092
Long-term care insurance (0.4724%)	29,052
Employment insurance (0.9%)	55,350
Total extra cost	1,847,914

The limit is KRW 63,000,000 × 20% = KRW 12,600,000, which is above KRW 2.4 million, so the taxable benefit is KRW 6,150,000.
Total salary becomes KRW 86,150,000, the tax base rises from KRW 51,250,000 to KRW 57,092,500 and determined tax from KRW 5,540,000 to KRW 6,942,200.
The extra cost is KRW 1,847,914, so the nominal 29.76% discount becomes 26.83% after tax, still KRW 13,752,086 cheaper than a regular purchase totalling KRW 59,850,000.
The last restricted day is 2028-11-20 for the car and 2028-12-10 for the refrigerator, and each can be resold from the next day.

Fictional example 2: selling within two years or no common standard

With the same inputs, breaking a condition changes the taxable benefit and the extra cost sharply.
If the car is to be sold on 2028-06-30, before the last restricted day, its KRW 18,000,000 discount drops out of the exemption and only the refrigerator’s KRW 750,000 stays tax-free.

Example 2: tax-free amount, taxable benefit and extra cost by situation, in KRW
Situation	Tax-free (KRW)	Taxable (KRW)	Extra cost (KRW)
All conditions met (example 1)	12,600,000	6,150,000	1,847,914
Car sold on 2028-06-30	750,000	18,000,000	5,408,532
No common standard	0	18,750,000	5,633,887

One early sale raises the extra cost from KRW 1,847,914 to KRW 5,408,532, an increase of KRW 3,560,618.
Without one standard for all employees, neither purchase qualifies, all KRW 18,750,000 is taxable and the extra cost is KRW 5,633,887.
If you plan to change cars, simply scheduling the sale after the resale-from date can save millions of won.

Fictional example 3: the KRW 2.4 million floor and splitting years

Two appliances are usually tax-free

Buying a TV with a market price of KRW 2,500,000 for KRW 1,500,000 and a laptop with a market price of KRW 2,000,000 for KRW 1,400,000 gives a KRW 1,600,000 discount.
Twenty percent of the KRW 4,500,000 market total is KRW 900,000, but the KRW 2.4 million annual floor sets the limit at KRW 2,400,000, so the whole discount is tax-free.

Move the small purchase to next year

In example 1, moving the refrigerator to January 2027 makes the 2026 limit KRW 12,000,000 and the taxable benefit KRW 6,000,000.
The 2027 refrigerator discount of KRW 750,000 is tax-free under that year’s KRW 2.4 million floor, cutting the extra cost to KRW 1,802,844, KRW 45,070 less.

Splitting helps most when a large purchase discounted above 20% and small high-discount purchases fall in the same year, and when the taxable benefit crosses a progressive bracket.
The calculator’s “best split over two years” compares every way of dividing up to eight purchases between two years and shows the split with the lowest extra cost.

Four strategies for purchase timing and resale dates

Discounts of 20% or less need little worry

If every discounted purchase in a year is at 20% off or less, 20% of the market total is at least the total discount, so everything is tax-free.
Meet the conditions and there is no extra tax.

Separate years for large high-discount purchases

In a year with a large high-discount purchase such as a car, pushing other discounted purchases into the next year lets each year use its own KRW 2.4 million floor.

Try moving December purchases to January

Moving a December purchase to January changes the tax year.
The effect is larger when this year’s salary and marginal rate are high.

Sell only after the restriction ends

Do not resell cars and large appliances for 2 years or other goods for 1 year.
Signing the sale on or after the resale-from date shown by the calculator is the safe choice.

Use cases

A car-maker employee buying a new car

When long service brings a discount above 20%, check the extra year-end tax and health premiums in advance and choose the purchase year.

Managing the yearly limit at an electronics maker

When buying a TV, refrigerator and laptop over the year, check whether the cumulative market price and discount stay within the KRW 2.4 million floor.

Deciding when to sell your car

Before selling a car bought with an employee discount, check the last restricted day and the resale-from date so you do not lose the exemption.

Payroll guidance

Welfare and payroll teams can use the results to explain how purchase timing affects withholding and why a common standard matters.

Check these points before buying

The market price is the Corporate Tax Act Article 52(2) price, the normal price actually charged to consumers.
If your employer’s wage statement uses a different figure, the result changes, so confirm it with payroll.
Own consumption is a condition, so buying to resell or transfer is not tax-free.
Confirm the treatment of family use with your employer or the tax office.
If your company’s resale ban is longer than the statutory period, follow the company rule.
Purchases before 2025-01-01 are outside this rule under Addenda Article 4, so the calculation is withheld.
General welfare points with no restriction on use are ordinary wage income, not an employee discount.

Assumptions

The calculator assumes a resident with wage income only and applies the 2026 basic rates, earned income deduction and wage tax credit.
It does not model the health insurance pay cap, the national pension, other global income or taxes on the purchase itself such as acquisition tax or individual consumption tax.
The split scenario assumes the same salary and deductions in both years, and purchases in 2027 or later use the 2026 rates as a projection.

Frequently asked questions

Do I always pay tax on an employee discount?

No.
Since 2025 an employee discount is wage income, but if the purchase is for your own use, resale is restricted and one standard applies to all employees, the discount is tax-free up to the larger of 20% of the year’s discounted market total and KRW 2.4 million.
Only the discount above that limit is added to your salary.
A few discounted appliances totalling KRW 2.4 million or less usually carry no tax.

How much is taxed on a 30% car discount?

A car with a market price of KRW 60 million bought at 30% off (KRW 18 million discount) with no other discounted purchase that year has a limit of KRW 60 million × 20% = KRW 12 million, so KRW 6 million is taxed.
At a discount of 20% or less, 20% of the market price is the limit and the whole discount is tax-free.
The real cost depends on your marginal rate, so enter your salary and deductions in the calculator.

Is the KRW 2.4 million limit per purchase or per year?

It is per tax year (January 1 to December 31).
Decree Article 17-5(1) sets the limit as the larger of 20% of the combined market price of all goods and services bought at a discount in that tax year and KRW 2.4 million a year.
Several purchases in one year share one limit, while purchases in different years each use that year’s limit.

When does the resale restriction end?

Goods whose useful life under the consumer dispute resolution standard exceeds 5 years and goods subject to individual consumption tax, such as passenger cars, are restricted for 2 years; other goods and services for 1 year.
Following the Civil Act rule that the first day is not counted, the calculator shows the same calendar day n years after purchase as the last restricted day and the next day as the resale-from date.
If your company rule is longer, follow it.

What if I sell the car within two years?

If the resale restriction is broken, that car’s discount drops out of the exemption and becomes wage income in full.
In the example, selling the car on 2028-06-30 raises the taxable benefit from KRW 6,150,000 to KRW 18,000,000 and the extra cost to KRW 5,408,532.
If year-end settlement is already closed, a corrected wage statement or a global income tax return may be needed.

What rate applies to the amount above the limit?

The taxable benefit is added to total salary, so the earned income deduction and the wage tax credit cap are recalculated.
With a KRW 80 million salary the marginal rate was 24% plus 10% local income tax, and health insurance 3.595%, long-term care 0.4724% and employment insurance 0.9% brought the extra cost to about 30% of the taxable amount.
The ratio rises with salary.

Does splitting purchases between this year and next really help?

If one large high-discount purchase and several small ones fall in the same year, the small ones share the same limit.
Moving the small ones into the next year can make them tax-free under that year’s KRW 2.4 million floor.
In the example, moving the refrigerator to January of the next year cut the extra cost by KRW 45,070.
The effect is larger when the taxable benefit crosses a progressive bracket.

Do affiliate products or welfare points count?

Decree Article 38(3) lists four methods: selling your employer’s products below market price, a subsidy for buying them, a subsidy for buying an affiliate’s products, and an affiliate selling below market price while your employer pays the difference.
General welfare points with no restriction on use are ordinary wage income, not this discount rule.
Ask payroll which method your benefit uses.

Legal basis and reference date

The current texts were checked through the National Law Information OPEN API on 2026-10-29 (Income Tax Act MST 280405, Income Tax Decree MST 290841, National Health Insurance Decree MST 289701, Long-Term Care Insurance Decree MST 286011, Insurance Premium Collection Decree MST 280527).
A search for official interpretations and court decisions on employee discounts returned no results, so none are cited.
Tax law and premium rates can change every year, so recheck the rules for your purchase year.

Check the after-tax discount before you buy

With the market price, employee price, purchase date and salary you can see the tax-free limit, the extra tax and the resale date right away.
To review tax-free salary items or the health insurance settlement as well, use the calculators below.

Korean Employee Discount Tax-Free Limit and Extra Tax Calculator

1. Discounted purchases

2. Company standard and your year-end settlement

Tax-free limit and extra cost

National pension and withholding timing