Compare Korean inheritance tax and the reduction in heirs’ net proceeds
A legacy donation commits part of a person’s accumulated wealth to a public purpose.
A testamentary bequest, a contribution made by heirs and a lifetime donation can involve different tax requirements and evidence even when the amount is identical.
This calculator compares those three routes under Korean 2026 rules, using a no-donation baseline to distinguish tax saved from the amount heirs actually forgo.
All amounts are Korean won (KRW).
The main output is the reduction in heirs’ net proceedsStart with the donated amount less inheritance tax savings.
The lifetime scenario also includes usable current-year national income tax credit, assuming the saved cash is retained and ultimately inherited.
The model excludes the decedent’s final-year testamentary donation credit and any income tax credit on the heirs’ side; it therefore does not determine which route produces the best complete family tax outcome.
The initial inputs are fictional, not a real client’s circumstances.
Consider the purpose of the gift, the recipient’s activities, the family’s living expenses and the practical execution of a will alongside the tax figures.
This is a static comparison at current values, not a forecast of asset prices, lifespan, future investment returns or future legislation.
Three donation routes and their different requirements
Testamentary bequest
A gift is transferred under the decedent’s will or equivalent arrangement.
For the state, local governments and qualifying statutory public bodies, review Article 12(1) of the Inheritance and Gift Tax Act.
For a qualifying public-interest entity, review Article 16, including actual completion and recipient requirements.
A clause in a will alone does not establish compliance.
Contribution by heirs
Heirs contribute inherited property to an eligible recipient within the relevant filing period.
Article 12(7) covers qualifying gifts to the state and similar bodies, while Article 16 and Enforcement Decree Article 13 govern public-interest contributions.
Taking inherited property in an heir’s own name does not by itself make the exclusion unavailable.
Lifetime donation
The donor transfers property while alive, reducing the property available for a later inheritance.
Income tax credit depends on the donation category, adjusted income, personal eligibility and remaining usable national income tax.
The comparison freezes 2026 rules and current values rather than predicting a future death or estate.
Both public-interest bequests and contributions by heirs require review of the Article 16 completion deadline.
A gift by heirs to the state or similar bodies also has the Article 12(7) deadline.
However, the Article 12(1) government bequest itself is not subject to that same contribution-deadline condition.
For a scenario requiring timely completion, removing the confirmation compares a transfer without the ordinary timely-contribution exclusion.
The property still leaves the family even if the inheritance tax saving is lost.
Special extensions for legal or administrative delays are not automatically recognized, and donation timing is separate from timely tax filing.
Prepare the estate and deduction inputs
Current estate and verified costs
Separate real estate, financial assets and other property using tax valuation amounts.
Do not include earlier gifts in both current assets and the prior-gift input.
Enter public charges, debts and funeral expenses only to the extent confirmed deductible under tax law, rather than using every amount paid.
Valuation dates and supporting evidence matter.
Four separate deduction totals
Enter independently reviewed inheritance deductions for the baseline, bequest, heirs’ contribution and lifetime scenarios.
The example’s KRW 500 million is not an automatic entitlement for every family.
Actual spouse allocations, the composition of heirs, net financial assets and the donated property can change the available deductions.
Retaining the saved lifetime income tax can also affect the financial-asset deduction.
Do not add spouse, financial-asset, cohabiting-home or business deductions without checking their conditions.
Earlier gifts added back
Review the ten-year period for gifts to heirs and the five-year period for gifts to other recipients under Article 13.
Do not add back property that falls within Article 13(3)’s exclusions.
Enter the gift deduction previously applied to those included gifts separately for the Article 24 ceiling calculation.
Scenario-specific ceiling reductions
Review Article 24 items 1 and 2 for bequests to persons outside the first rank of heirs and property inherited by a subsequent rank after renunciation.
Enter independently confirmed reductions for the baseline, bequest, heirs’ contribution and lifetime scenarios.
Exempt or excluded donation treatment alone does not establish that these reductions are identical or always exclude the donation.
Prior-gift reductions are calculated separately and must not be entered again here.
Cases involving a credit for tax paid on prior gifts, a generation-skipping surcharge, appraisal-fee deductions or special regimes fall outside this simplified comparison.
Keep the result pending until material facts and amounts have been reviewed.
Entering zero merely because an amount is unknown can materially distort the estimate.
Confirm the deduction-ceiling facts for every scenario before using financial results.
From taxable estate value to estimated inheritance tax
- Subtract verified estate costs and the scenario’s exempt or excluded donation property from current assets, then add includible prior gifts to obtain taxable estate value.
- Recalculate the Article 24 deduction ceiling for every scenario.
When taxable estate value exceeds KRW 500 million, subtract the included prior gifts after their applicable gift deductions, in addition to other verified ceiling reductions.
A donation may move the estate from above this threshold to at or below it.
- Apply the smaller of reviewed total deductions and the statutory ceiling to determine the tax base.
Article 25 provides that inheritance tax is not imposed where the tax base is below KRW 500,000.
- Apply Article 26 progressive rates and, for an on-time return, the Article 69 filing credit of 3%.
The filing credit is not applied when late filing is selected.
Completing a donation in time and filing a return in time are checked separately.
Progressive rates and net-proceeds formulas
The rates are 10% up to KRW 100 million; 20% above KRW 100 million through 500 million; 30% above KRW 500 million through 1 billion; 40% above KRW 1 billion through 3 billion; and 50% above KRW 3 billion.
Do not treat the marginal rate multiplied by the entire donation as the confirmed saving.
Both progressive brackets and deduction ceilings must be recalculated.
Baseline net proceeds = current net estate − baseline inheritance tax
Legacy net proceeds = current net estate − donation − scenario inheritance tax
Lifetime net proceeds = current net estate − donation + usable national credit − scenario inheritance tax
Reduction in heirs’ net proceeds = baseline net proceeds − scenario net proceeds
A public-interest recipient needs more than a charitable name
First confirm that the recipient is a qualifying public-interest entity under Article 16.
A description as a nonprofit organization does not establish both inheritance tax exclusion and income tax donation credit.
Review the public-interest requirements separately from the income tax donation category and receipt requirements.
- Confirm the heirs’ intent to contribute.
Where there is more than one heir, Enforcement Decree Article 13(2) requires agreement among them.
- Check that heirs do not exceed one fifth of the serving directors, using five as the denominator where fewer than five directors serve.
Also check the separate restriction on authority to decide important operational matters, including director appointments.
- Confirm that the contributed property or its benefits do not accrue to heirs or their related persons.
Article 16(4) can add the relevant property or benefits back into the taxable estate value.
- Keep contribution confirmations, actual transfer evidence, recipient documentation and the heirs’ agreement.
Review post-contribution use and management obligations as well as the original transfer.
A confirmation checkbox records the user’s review; it does not certify legal eligibility or validate a transfer.
Unverified recipient or control conditions should produce a pending result, not a confirmed zero tax bill.
Check aggregate holdings before donating domestic voting shares
Ordinary 10%, conditional 20% and relevant 5% limits
A contribution of domestic voting shares or equity interests is tested against more than the donated holding alone.
Review existing holdings of the recipient and the holdings contributed to other public-interest entities that the law requires to be aggregated for the donor, heirs and related persons.
Use the correct outstanding-share denominator, excluding treasury holdings where required, and a consistent valuation basis.
Article 16(2) ordinarily uses 10%.
A 20% ratio requires the relevant non-exercise of voting rights and charitable, scholarship or social-welfare purpose conditions.
A 5% ratio applies in relevant enterprise-group relationships or where the entity fails the Article 48(11) conditions.
Selecting a higher percentage does not itself satisfy those requirements.
For example, with a verified 10% limit, existing aggregated holdings of 6% and a new contribution of 8%, ordinary remaining capacity is 4%.
For identical shares valued proportionally, the simplified model excludes half the new contribution value and includes the other half.
It does not decide Article 16(3) exceptions, differences between share classes or disputed valuations.
Lifetime share contributions require a separate Article 48 review of gift tax at the recipient and the applicable aggregation relationships.
The full lifetime net-proceeds result is therefore withheld for shares.
Do not reuse the legacy scenario’s ratio as a confirmed lifetime tax result.
Count only the lifetime donation credit usable this year
Income Tax Act Article 59-4(4) applies to eligible residents and qualifying donations.
A person with business income only generally cannot use this credit model unless a statutory exception applies.
The calculator assumes one donation category, no other current donations and no carried-forward donations.
It does not calculate business-expense treatment or the ordering of mixed categories.
Use a separate confirmed income tax donation value
Distinguish the property value leaving the estate from the donation value recognized for income tax credit.
Noncash gifts can have different book-value, market-value or receipt valuation requirements.
Do not automatically use the inheritance-estate outflow as the income tax donation basis; enter the amount reviewed for the relevant tax separately.
Only the fictional example below assumes the two amounts are both KRW 100 million.
Income-based limits
The simplified limits use 100% of adjusted income for special donations, 30% for ordinary nonreligious donations and 10% where the only ordinary donations are religious.
Mixed religious and nonreligious donations require a separate 10% plus additional-capacity formula outside this single-category model.
Credit rates and available national tax
The rate is 15% on the first KRW 10 million of eligible donations and 30% on the excess.
The usable credit cannot exceed the remaining eligible national income tax liability.
An unused amount is not treated as an immediate cash refund.
The additional ten percentage points available only for qualifying 2024 donations are not applied to 2026.
Review the donation amount above the income ceiling and the calculated credit unused because of insufficient tax separately.
Carryforward eligibility and later savings depend on statutory conditions and future income and liability; they are not added to current saved cash.
Local income tax effects are also excluded.
Testamentary donations can also require income tax credit reviewNTS Written Interpretation 2016-5290, Legal Interpretation Division-316, dated 2017-01-31, addresses the decedent’s donation credit for property contributed under a will to a public-interest entity and excluded under Article 16.
Do not conclude that bequests can never qualify for income tax credit.
This calculator excludes final-year credits and credits on the heirs’ side from its limited comparison; any reviewed credits and resulting refund property require separate tax treatment.
Worked example: donating KRW 100 million
Assume current assets of KRW 2 billion, no deductible costs or prior gifts, and reviewed deductions of KRW 500 million both before and after the donation.
Other Article 24 ceiling reductions are independently assumed to be zero in all four scenarios; this is a fictional fact assumption, not a universal legal conclusion for donations.
The KRW 100 million gift is an eligible ordinary nonreligious donation of non-share property with a separately confirmed income tax donation value of KRW 100 million; adjusted income is KRW 100 million and remaining usable national tax is KRW 20 million.
The example assumes timely filing and timely completion wherever required, and excludes income tax credits related to the bequest or heirs.
Fictional no-donation, bequest or heirs’ contribution, and lifetime donation comparison; all amounts in KRW| Item | No donation | Bequest / heirs | Lifetime |
|---|
| Inheritance tax base | 1,500,000,000 | 1,400,000,000 | 1,407,500,000 |
| Estimated inheritance tax | 426,800,000 | 388,000,000 | 390,910,000 |
| Inheritance tax saving | 0 | 38,800,000 | 35,890,000 |
| Included national income tax credit | 0 | 0 | 7,500,000 |
| Reduction in heirs’ net proceeds | 0 | 61,200,000 | 56,610,000 |
The lifetime eligible amount is 30% of income, or KRW 30,000,000.
The credit equals 15% of the first KRW 10 million plus 30% of the next KRW 20 million: KRW 7,500,000.
If retained, this saved cash leaves KRW 1,907,500,000 in the post-donation estate and requires inheritance tax to be recalculated.
Ignoring that retained saving would overstate the lifetime benefit.
These figures describe only the stated assumptions and do not rank complete family tax outcomes.
Start the schedule with the unadjusted statutory date
Article 67 generally allows six months from the end of the month in which inheritance begins.
Review the nine-month provision where the decedent or an heir has an address abroad.
The foreign-address input is a filing-period check; it does not enable nonresident inheritance tax calculations.
The calculator accepts 2026 inheritance dates for this rule set.
The displayed date is not a confirmed final deadline
The date excludes adjustments for weekends and public holidays, different starting points for appointed executors, and special extensions for legal or administrative delays in establishing an entity or transferring title.
It is the basic statutory date before holiday extensions.
Confirm actual filing and contribution deadlines with the competent tax office or a Korean tax adviser, and prepare ahead of that date.
The date of a will, family agreement or document submission may differ from the date property is legally transferred.
An intention to donate is not proof that the exclusion has been completed.
Check payment records, registration and other evidence of actual performance, and ask the intended recipient about its procedures while planning.
Turn the comparison into a family action plan
- Reserve living expenses and inheritance tax funding before fixing the donation amount and property.
Donating real estate can change the family’s remaining liquidity as well as its total wealth.
- Request recipient documentation and contribution procedures, and review agreement among heirs and limits on director or management control.
Record restrictions on the intended use of the donation in writing.
- Enter reviewed valuations, deductions, income and usable tax, then resolve pending facts before relying on the figures.
When the donation changes, review the post-donation deductions and aggregated shareholding inputs too.
- Save or print the result for will preparation, family discussions and tax consultation.
Keep recipient evidence, valuation reports, agreements and transfer confirmations separately from the calculator output.
Spreading a lifetime gift over several years may change usable income and tax capacity, but this calculator compares only one year.
Do not count all possible future carryforwards as guaranteed savings today.
Recipient continuity, fulfillment of the charitable purpose, will validity, forced-heirship issues and civil disputes are outside the automatic assessment.
Frequently asked questions
Does taking inherited property in an heir’s name prevent exclusion?
Not by itself.
Review Article 12(7) for qualifying gifts to the state and similar bodies, and Article 16 with Enforcement Decree Article 13 for public-interest contributions.
Timing, consent and control requirements still matter.
Is the saving simply the donation multiplied by the top 50% rate?
No.
The tax base may cross progressive brackets and the deduction ceiling may change.
Recipient conditions and shareholding limits also affect exclusion, so each complete scenario must be recalculated.
Can I keep deductions unchanged before and after donating?
Only if the same deductions are correct for all four scenarios.
Changes in spouse allocations or financial assets can change deductions.
Include the retained lifetime tax saving in each review and do not use the example’s KRW 500 million without checking the relevant conditions.
Does a late donation remain with the family in this model?
No.
The property still leaves the family even if the ordinary exclusion is unavailable.
Any special extension or exception requires separate legal and deadline review.
Can a bequest qualify for an income tax donation credit?
It may require that review.
The NTS written interpretation dated 2017-01-31 addresses the decedent’s donation credit for a testamentary public-interest contribution.
This model excludes the final-year credit and credits on the heirs’ side, so review them separately when filing.
Why is the usable lifetime credit smaller than the calculated credit?
Both the income-based donation limit and the remaining eligible national tax liability can restrict current use.
Excess amounts are not immediate refundable cash.
Review carryforward conditions and future circumstances separately.
Can I select a 20% public-interest shareholding limit?
Use it only after confirming the statutory voting-right and purpose conditions.
Existing aggregated holdings and related-person relationships also require review.
The lifetime share scenario remains pending because Article 48 recipient gift tax is outside the full comparison.
How is a pending result different from zero?
Zero is a value calculated under the entered assumptions and supported rules.
Pending means material eligibility or scope facts have not been established.
Do not interpret both states as confirmed tax exemption.
Official sources and rule dates
Sources were checked on 2026-11-07 using the National Law Information OPEN API.
The versions are Inheritance and Gift Tax Act MST 276123, effective 2026-01-02; its Enforcement Decree MST 290845, effective 2026-10-01; and Income Tax Act MST 280405, effective 2026-07-01.
Recheck later amendments, recipient eligibility, deductions before and after donation, earlier gifts and actual deadlines before acting.
Complete the missing facts and compare again
Return to the calculator with the family’s intended donation, recipient evidence, reviewed valuations and deductions.
Save the reduction in net proceeds alongside unresolved deadline and eligibility questions for a focused tax consultation.
Use these related tools when deduction limits or property valuations need more work.