If a Chuseok bonus qualifies as wages, it is subject to income tax and local income tax withholding. Employment insurance is generally reflected in remuneration for the month of payment. National pension and health insurance may be reconciled after standard monthly income and remuneration are reported, so first check the pay statement and the payment coverage period.
Based on public inquiry cases released in October 2025
Calculation Steps to Follow Now
First, check the taxable amount of the bonus and the payment coverage period. Simply applying a fixed tax rate to the monthly salary will not produce an accurate result. If the company has not yet closed payroll, you can ask the person in charge for the basis of the calculation.
- Prepare the bonus payment notice and employment contract.
- Check the regular salary for the same period as the payment coverage period.
- Verify that the numbers of dependents and children are correct.
- Separate the taxable bonus from recognized non-taxable amounts.
- Check the income tax withheld from the bonus and the local income tax.
- Determine whether each type of insurance is deducted in the month of payment.
- Compare the payments and deductions on the pay statement.
Any separate application deadline for employees should be checked in the relevant regulations or with the department responsible at the company. However, it is faster to report errors before the company closes payroll. Unreflected amounts may be adjusted through year-end tax settlement or insurance premium reconciliation.
Taxability by Condition
The purpose of the payment and whether it constitutes wages determine taxability more than its name. The same standards apply to cash and bank transfers. Labeling a payment as “transportation expenses” does not automatically make it non-taxable.
| Payment type | General treatment | Documents to check |
|---|---|---|
| Regular holiday bonus | Included in taxable employment income | Employment contract, rules of employment |
| One-time performance bonus | Included in taxable employment income | Performance bonus payment criteria |
| Cash or bank transfer bonus | Determined regardless of payment method | Pay statement, transfer records |
| Fixed payment labeled as transportation expenses | Check whether non-taxation requirements are met | Payment policy, commuting arrangement |
| Reimbursement of actual business expenses | Check documentation and whether it reimburses actual expenses | Receipts, business trip expense statement |
| Gift certificates or in-kind payments | Check whether the economic benefit constitutes employment income | Payment details, assessed amount |
Amounts reimbursing actual expenses may be distinguished from wages. In contrast, a lump-sum payment made in return for work is likely to be employment income. Non-taxability cannot be determined solely by the name used by the company.
Structure of Income Tax Withholding on Bonuses
Income tax on a bonus is calculated together with salary for the payment coverage period. The National Tax Service’s simplified employment income tax withholding table forms the basis of the calculation. Dependent information also affects the amount of tax withheld.
If there is a payment coverage period, use the following structure.
- Add the bonus to the regular salary for the same period.
- Apply the simplified tax table to the monthly average amount.
- Calculate the difference from the tax applied to the regular salary alone.
- Calculate that difference based on the payment coverage period.
- Adjust for tax on bonuses already paid during the same period.
If there is no payment coverage period, separate period rules apply. Bonuses paid previously may also affect the calculation. Therefore, a simple calculator that only accepts the bonus amount may produce a different result.
The local income tax rate should be checked in the latest Wetax guidance. If there is no income tax, whether local income tax is imposed should be checked in the latest Wetax guidance. The final tax is recalculated based on annual employment income during year-end tax settlement.
The precise rules can be found in the Enforcement Decree of the Income Tax Act on the Korean Law Information Center. For withholding on bonuses and similar payments, check the relevant withholding provisions of the Enforcement Decree. The latest simplified tax table should be checked through the National Tax Service or Hometax.
Comparison of When the Four Major Social Insurances Are Reflected
A bonus is not deducted identically for every type of insurance in the same month. Because of this difference, reviewing only the net pay for the month of payment may lead to the mistaken conclusion that something was omitted. In principle, industrial accident compensation insurance premiums are not deducted from an employee’s pay.
| Item | How the bonus is reflected | Deduction characteristics in the month of payment | Possibility of later reconciliation |
|---|---|---|---|
| National pension | Reflected in income used to calculate standard monthly income | May not immediately increase by the amount of the bonus payment | May be reflected when standard monthly income is determined |
| Health insurance | Included in total annual remuneration | May be deducted based on current monthly remuneration | May be reconciled after total remuneration is reported |
| Long-term care insurance | Linked to health insurance premiums | Connected to the timing of health insurance processing | May change depending on health insurance reconciliation |
| Employment insurance | Bonus included in remuneration for the relevant month | Deduction may increase in the month of payment | Differences between reported and actual remuneration may be reconciled |
| Industrial accident compensation insurance | Premium paid by the employer | Not subject to employee deduction | Within the employer’s reporting responsibilities |
National pension premiums are imposed based on the current standard monthly income. A one-time bonus does not cause the premium for that month to increase proportionally. However, it may be included in a later calculation of standard monthly income.
Health insurance is reconciled by linking monthly remuneration with total annual remuneration. Long-term care insurance premiums are also linked to health insurance premiums. Even if less is deducted in the month of payment, a reconciliation amount may arise later.
Employment insurance is closely tied to actual remuneration. A bonus that constitutes taxable employment income is generally included in remuneration for the month of payment. Depending on the company’s reporting method, the difference may be adjusted later.
