Year-End Tax Settlement in Korea: Key Dates & Legal Rights for Workers and Retirees

Year-End Tax Settlement in Korea: What to Do and When

One of the most frequently searched terms by Korean workers at the start of every year is "year-end tax settlement" (연말정산). Year-end tax settlement is the process of comparing the income tax withheld at source throughout the year against the actual tax owed, then either receiving a refund of the difference or paying any shortfall. Below is a summary of the key schedule for 2026 and the legal rights every worker must know.

2026 Year-End Tax Settlement Key Schedule

The year-end tax settlement process proceeds in three main stages.

① Collecting simplified tax data (mid-January)
The National Tax Service's Hometax "Year-End Tax Settlement Simplified Service" (연말정산 간소화 서비스) opens around January 15 each year. Workers can look up and download deduction data such as medical expenses, education costs, insurance premiums, and credit card spending.

② Submitting deduction application forms (end of January)
Workers submit the simplified tax data along with any additional supporting documents to their employer. The employer then calculates each worker's settled tax amount.

③ Refund or additional payment (February pay day)
The settlement result is normally reflected in the February salary payment. If there is a refund amount, it is added to the salary; if there is an additional amount owed, it is deducted from the salary.

Note for foreign workers: The above is the statutory standard process. Your employment contract or company policy may specify different internal deadlines, but these cannot fall below the statutory requirements.

Year-End Tax Settlement for Retirees — You Are Entitled to Your Refund

Not only current employees but also retirees have the right to receive a year-end tax settlement refund. Legal disputes frequently arise over this point.

Article 36 of the Labor Standards Act (근로기준법 제36조) requires an employer to pay all wages, severance pay (퇴직금), and any other monies within 14 days of the employee's resignation date. The Supreme Court has clearly ruled that a year-end tax settlement refund falls under these "any other monies" (Supreme Court 2009도2357). In other words, if an employer fails to pay a resigned worker's year-end tax settlement refund within 14 days, the employer may face criminal punishment for violating the Labor Standards Act.

Furthermore, if payment is delayed beyond 14 days, annual interest of 20% accrues under Article 17 of the Enforcement Decree of the Labor Standards Act (근로기준법 시행령 제17조). This is the same standard as the late-payment interest applied to severance pay.

What to Do If Your Employer Refuses to Pay the Refund

1. Send a certified letter (내용증명): Submit a written demand to the employer specifying the payment deadline and the amount owed.
2. File a complaint with the Ministry of Employment and Labor: You may file a wage-arrears complaint (임금체불 진정) with the regional Employment and Labor Office (지방고용노동청) that has jurisdiction over the workplace. Filing is free of charge, and a labor inspector will investigate the facts.
3. Small-claims court action: If the amount is small, you may also apply for a small-claims trial (소액사건 심판) at the court.

Mid-Year Retirees Can Claim Additional Deductions During the May Comprehensive Income Tax Filing

If you resigned during the year, the employer conducts a retirement-time settlement, but additional deductible items that arise after that point — such as medical expenses or donations — are not reflected. In such cases, you can apply for those additional deductions directly through Hometax during the comprehensive income tax filing period in May of the following year and receive a refund.

Calculate Your Take-Home Pay and Deductions in Advance

Your actual take-home pay may vary depending on the year-end tax settlement result. You can use the salary take-home pay calculator at Workbear (workbear.kr) to check your estimated monthly take-home pay including the four major social insurance contributions and income tax. For questions about severance pay settlement or wage arrears, use the AI search feature to find answers quickly.

This article is for informational purposes only and does not constitute legal advice. For specific cases, consult a certified labor attorney (노무사) or lawyer.