Payroll deductions and 3.3% freelancer withholding in Korea for 2026

This guide is for founders, managers and payroll staff in Korea who pay employees, freelancers or both. Figures are for 2026. In short: from a salary you deduct four social insurance contributions and income tax, and from a freelancer's fee you usually withhold 3.3%. A freelancer who in fact works like an employee can leave you owing past contributions and retirement pay.

What comes out of a salary in 2026

Korea's four social insurances (4대보험) are the National Pension (국민연금), National Health Insurance (건강보험) together with Long-term Care Insurance (장기요양보험), Employment Insurance (고용보험) and Industrial Accident Compensation Insurance (산재보험). Contributions are charged on taxable pay. Tax-free items, such as a qualifying meal allowance, are left out of the base.

Several figures in older articles are out of date:

• The pension rate rose from 9% to 9.5% in January 2026. It will be 10% in 2027, then rise 0.5 percentage points a year to 13% from 2033, at the same rate for every age.
• Pension contributions are charged on monthly income between ₩410,000 and ₩6,590,000 (July 2026 to June 2027).
• Health insurance stays at 7.19% in 2027.
• Long-term care insurance is collected with health insurance from every subscriber, including employees under 40.
• Workers hired under the Act on the Employment of Foreign Workers (외국인근로자의 고용 등에 관한 법률), and D-3 (technical training) or E-8 (seasonal work) holders who are workplace subscribers, can apply to opt out of long-term care insurance. E-8 was added on May 12, 2026.

Worked example: ₩3,000,000 of taxable pay

An employee receives ₩3,000,000 base pay and a ₩200,000 meal allowance. If the company does not provide meals, a meal allowance of up to ₩200,000 a month is tax-free, so contributions are charged on ₩3,000,000.

These amounts are before any rounding by the collecting agencies. The employer pays the same pension, health and care amounts, ₩27,000 plus ₩7,500~₩25,500 of employment insurance, and the whole industrial accident premium (₩44,100 at the 1.47% average).

Income tax and local income tax

Monthly income tax on wages follows the simplified withholding tax table (근로소득 간이세액표), Annex 2 of the Enforcement Decree of the Income Tax Act. It depends on the pay and the dependants the employee declares. A revised table applies from March 1, 2026. Add local income tax (지방소득세) of 10% of the income tax. Pay the income tax to the tax office and the local income tax to the local government by the 10th of the following month (approved semiannual payers: the 10th of the month after each half-year). See also After withholding tax, pay 10% local income tax on Wetax by the 10th.

Paying freelancers: 3.3% or 8.8%

A freelancer (프리랜서) who works on their own account, repeatedly, in their own trade and provides personal services that are exempt from VAT earns business income (사업소득). Withhold 3% income tax and 0.3% local income tax, 3.3% in total. On a ₩1,000,000 fee you withhold ₩33,000 and pay ₩967,000. Services subject to VAT fall outside this withholding rule.

Someone who provides a personal service only occasionally, such as an office worker giving a one-off lecture with no employment relationship, earns other income (기타소득). 60% of the payment is treated as expenses and the rest is taxed at 20%, so you withhold 8% income tax and 0.8% local income tax, 8.8% of the payment: ₩88,000 on ₩1,000,000. No income tax is due when the other income amount after deemed expenses is ₩50,000 or less per payment, which means a payment of ₩125,000 or less.

Reports and deadlines after paying a freelancer

1. Pay the withheld tax by the 10th of the following month: income tax to the tax office, local income tax to the local government.
2. File a simplified payment statement (간이지급명세서) by the end of the month after the payment. This covers business income and one-off personal-service income.
3. For most of this income, the monthly statements count as the annual payment statement (지급명세서). Otherwise the annual statement is due by March 10 of the next year for business income and by the end of February for other income.

There is no ₩5,000,000 minimum; every payment counts. Penalties for missing statements are 1% of the unreported amount for an annual statement (0.5% if filed within 3 months after the deadline) and 0.25% for a simplified statement (0.125% if filed within 1 month).

If you do not withhold, or pay late, the tax office collects the tax from you with a penalty: 3% of the unpaid tax plus 0.022% a day, capped together at 10% of the unpaid tax. Further charges apply if a payment notice goes unpaid.

When a "freelancer" is really an employee

Courts decide worker status by the substance of the relationship, not the title of the contract. In its leading decision of December 7, 2006 (2004다29736), the Supreme Court (대법원) listed factors such as:

• whether the company decides the work, applies its work rules and supervises substantially;
• whether it sets working hours and place;
• whether the person runs an independent business with their own tools or helpers and bears profit and loss;
• whether pay is a return for the work itself, with a base or fixed amount;
• how continuous and exclusive the relationship is.

Fixed pay, the type of tax withheld and social insurance status are easy for an employer to set, so their absence alone does not deny worker status. In that case, academy lecturers with "lecture service contracts", business registration and business income tax withheld were still employees. On September 21, 2023 (2021도11675), the Court held that a clinic doctor under a consignment contract, which even said he was not a worker, was an employee: he worked set hours, reported monthly, used the clinic's equipment and received fixed monthly pay. The lack of detailed supervision reflected the nature of medical work.

If a freelancer turns out to be an employee, the company can owe past social insurance contributions, retirement pay and other employee entitlements. Claims for unpaid wages and retirement pay expire after 3 years. Contract terms giving real freedom over methods, hours and place, pay by results and permission to work for others help only when daily practice matches them.

Checklist

• Deduct the 2026 employee rates: 4.75%, 3.595%, 0.4724% and 0.9%, leaving tax-free items such as a qualifying meal allowance out of the base.
• Withhold income tax from the current simplified table plus 10% local income tax, and pay by the 10th.
• Withhold 3.3% from business-income freelancers and 8.8% from one-off personal services, and file simplified payment statements monthly.
• Check a freelancer's business registration and that any invoice matches the work actually done.
• Review each freelancer arrangement against the Supreme Court factors, in practice as well as on paper.