Retirement Income Tax Calculator
Enter severance pay and years of service to compute Korean retirement income tax with all five steps applied (tenure deduction, salary conversion, deduction, progressive rate, scaling).
Pre-tax severance from the severance-pay calculator or company-provided amount.
Whole years (under 1 year → enter 1). Fractional years are simplified to whole years.
After-tax payout
95,737,500KRW
Total tax: 4,262,500 KRW (4.26%)
- Tenure-year deduction
- 15,000,000KRW
- Converted salary
- 102,000,000KRW
- Converted-salary deduction
- 62,600,000KRW
- Tax base
- 39,400,000KRW
- Bracket rate
- 15%
- Determined tax
- 3,875,000KRW
- Local surtax
- 387,500KRW×10%
- Total tax
- 4,262,500KRW
- Tenure 10 years → deduction 15,000,000 KRW applied
- Progressive rate 15% applied
What is retirement income tax?
Retirement income tax is a separately-classified national tax on severance pay — it is not aggregated with other income. Longer tenure earns larger deductions, generally producing a lower effective rate than ordinary income tax. The calculation has five steps: ① subtract the tenure-year deduction → ② annualize (× 12 / years) → ③ subtract the converted-salary deduction → ④ apply the progressive rate (6–45%) → ⑤ scale back by years to get the determined tax. A 10% local surtax is added on the determined tax.
Five-step flow
- 1. Conversion base = Severance − Tenure deduction
- 2. Converted salary = Conversion base × 12 / Years
- 3. Tax base = Converted salary − Converted-salary deduction
- 4. Annualized tax = Tax base × Rate − Progressive deduction
- 5. Determined tax = Annualized × Years / 12 (+ 10% local surtax)
Tenure-year deduction (post-2023 revision)
| Years of service | Deduction |
|---|---|
| ≤ 5 years | 1M × years |
| 6–10 years | 5M + 2M × (years − 5) |
| 11–20 years | 15M + 2.5M × (years − 10) |
| 21+ years | 40M + 3M × (years − 20) |
Frequently asked questions
- Why is retirement tax lower than ordinary income tax?
- The tenure-year deduction shelters part of the cumulative reward, the conversion step disperses the progressive bracket effect, and retirement income is separately classified — your other income does not push it into a higher bracket.
- How do I combine this with the severance-pay calculator?
- Run the severance-pay calculator first to get the pre-tax amount, then enter that here for the after-tax payout. Together they show what actually lands in your bank account.
- Does DC pension face the same tax?
- Yes for lump-sum withdrawal. Rolling into an IRP and drawing as a pension reduces the effective rate to 70% (60% for the portion held over 10 years) of the lump-sum tax. This calculator assumes lump-sum payout.
- What about executive severance?
- Amounts beyond "3 × average wage × years of service" are reclassified as ordinary income and taxed comprehensively, often much higher than this calculator's result. Executives should consult a tax accountant.
Reference only. Models standard-employee separately-classified retirement tax. Executive over-cap reclassification, IRP-pension reductions, special bonus integrations, and sub-year tenure precision are not handled. Confirm exact figures with HR, a tax accountant, or the Hometax simulator.