5 Legal Tax-Saving Methods for Salaried Workers to Get Up to 1 Million Won Back from Year-End Tax Settlement

💸 Are You Paying Extra Taxes Every Year? I Used to as Well

Every January and February, conversations among salaried workers go something like: “How much did you get back?” or “I ended up paying more again…” Let’s be honest — year-end tax settlement is complicated and tedious, so many people just go along with whatever their company tells them to do. I used to be the same way. But with just a little knowledge and preparation, even with the same salary, you can legally get back anywhere from hundreds of thousands to over 1 million won. Today, instead of diving into complex tax law, I’ll share only the practical, real-world tax-saving strategies you can start using tomorrow. Read all the way to the end, and your year-end tax settlement this year will be different. 😊

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✅ 1. Pension Savings + IRP: Get Up to 1,485,000 Won Back with Just These Two

The most powerful weapon for tax savings is pension savings accounts and IRPs (Individual Retirement Pension). Many people put off retirement planning with “I’ll worry about that later,” but these accounts actually serve double duty — they prepare you for retirement while reducing your taxes right now.

Pension Savings Fund (or Insurance): Tax credit on contributions up to 6 million won per year
Additional IRP Contributions: Combined with pension savings, deductions available up to 9 million won
Credit Rate: Total salary of 55 million won or less → 16.5%, above that → 13.2%

Let’s do a quick calculation. If a salaried worker with a total salary of 50 million won contributes 6 million won to pension savings + 3 million won to IRP, totaling 9 million won? 9,000,000 won × 16.5% = 1,485,000 won is directly deducted from their tax bill. Because this is a tax credit — not a deduction — the impact is far more powerful.

👉 Here’s what to do: Open a pension savings fund account right away and set up an automatic transfer of 500,000 won per month. An IRP can be opened for free at any securities firm or bank that handles retirement pensions. Contributing a little each month is far more advantageous in terms of investment returns than putting it all in at the end of the year.

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✅ 2. Credit Card vs. Debit Card: The Right Combination Is Key

You’ve probably heard of the card spending income deduction — but many people have no idea how to actually use their cards to maximize it. Let me explain the core principles.

Deduction Condition: Deductions apply only to spending that exceeds 25% of your total salary
Credit Card Deduction Rate: 15%
Debit Card & Cash Receipt Deduction Rate: 30% (twice that of credit cards!)
Traditional Market & Public Transit Spending: Up to 40–80% deduction

For example, if your total salary is 40 million won, deductions only kick in for spending above 10 million won (25%). This means the smart strategy is to use your credit card up to that 10 million won threshold to rack up points and discounts, then switch to a debit card or cash receipts after that for better tax savings.

👉 Here’s what to do: From January through September or October, use your credit card to maximize rewards. Once your spending exceeds 25% of your total salary, switch to a debit card. Also, always pay for public transit with a transit card (debit or credit doesn’t matter) to claim the 40% deduction — don’t forget that!

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✅ 3. Paying Monthly Rent? Don’t Miss the Rent Tax Credit

For salaried workers renting in Seoul or the greater metropolitan area — if you don’t know about this, you’re really missing out. The rent tax credit is a program that lets you get back up to 17% of an entire year’s rent, as long as you meet the conditions.

Eligible: Workers without home ownership whose total salary is 80 million won or less
Credit Rate: Total salary of 55 million won or less → 17%, above 55 million won up to 80 million won → 15%
Credit Limit: Annual rent payments up to 10 million won
Condition: The address on the lease agreement must match your registered address

If you pay 600,000 won per month in rent, that’s 7,200,000 won per year. Applying the 17% credit, you could get back approximately 1,224,000 won. This is real money!

👉 Here’s what to do: The rent tax credit often doesn’t show up automatically in the National Tax Service’s year-end settlement simplification service. In that case, you’ll need to directly submit a copy of your lease agreement, proof of rent transfers (bank transfer records), and a copy of your resident registration certificate. You don’t need your landlord’s consent to apply, so make sure you take care of this!

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✅ 4. Medical Expenses, Education Costs & Donations: Every Receipt Is Money

Most special deduction items are pulled in automatically through the NTS simplification service, but quite a few items get missed. You need to track these down yourself to get the full refund you’re entitled to.

Medical Expense Tax Credit: 15% credit on amounts exceeding 3% of total salary (infertility treatments and disability-related medical costs: 20–30%)
Easily Overlooked Medical Expenses: Eyeglasses and contact lens purchases (up to 500,000 won per person), hearing aids, postpartum care centers (up to 2 million won)
Education Expense Deduction: Full deduction for your own graduate school tuition; up to 3 million won per child for kindergarten through high school, up to 9 million won for university
Donation Deduction: 15% tax credit on designated donations up to 10 million won (including religious organizations)

In particular, eyeglass purchase receipts don’t get picked up by the simplification service. You need to request an “income deduction receipt” directly from the eyewear store. Did you get LASIK or LASEK surgery last year? That qualifies as a medical expense deduction too!

👉 Here’s what to do: Right now, jot these items down in your smartphone notes app and get into the habit of keeping receipts throughout the year. In January, check your records through the NTS Hometax “Year-End Settlement Simplification Service,” then directly submit any missing items. It may feel like a hassle, but that one effort can make a difference of hundreds of thousands of won.

🎯 Key Takeaways + A Warm Closing

Let me wrap up everything covered today in one place.

✔️ Pension Savings + IRP: Contribute up to 9 million won → Get back up to 1,485,000 won
✔️ Card Strategy: Use credit cards until you hit 25% of your total salary, then switch to debit
✔️ Rent Tax Credit: If you meet the conditions, get up to 17% back — submitting documents yourself is a must
✔️ Medical, Education & Donation Expenses: Manually track down any items missed by the simplification service

Saving on taxes isn’t just something the wealthy do. With year-end tax settlement, the more you know, the more you get back. I hope this one post makes even a small difference in your year-end tax settlement this year. There’s no reason to pay more taxes than necessary on the salary you worked so hard to earn. 😊 If there are any deduction items you’ve been overlooking, check on them right now. One small action today could change your bank balance next February. You’ve got this! 💪