Office worker Kim, a person surnamed Kim (32), said she heard news recently about revisions to the ISA (individual savings account) system and checked her brokerage-type ISA. She signed up in 2022 for the low-income ISA, which offers a tax exemption of up to 4 million won, but she set the maturity at five years, putting it on track to mature in 2027.
Kim said, "Starting next year, there will be restrictions on setting maturities, disrupting my plan to set a long maturity and make long-term investments in overseas index-tracking ETFs," adding, "I'm debating whether to close the account now and open a new one at another securities firm, but that would likely make me lose the low-income tax-exempt benefit, so it's hard to decide."
Attention is focusing on changes to the ISA (individual savings account) system after the government released the '2026 tax reform plan' recently. Among investors, there had been a commonly used formula to maximize ISA's tax-saving benefits, but that is expected to no longer hold.
The Ministry of Economy and Finance released the '2026 tax reform plan' on the 3rd, proposing a revamp of the existing ISA system along with the creation of a "productive finance ISA." With an ISA, investment revenue up to 2 million won (4 million won for the low-income type) is tax-exempt, and any excess is taxed separately at a low 9.9%. In addition, even if the annual contribution limit of 20 million won was not fully used, the unused portion rolled over to the following year. For example, if only 10 million won was deposited this year, the next year one could add the 10 million won carried over, allowing a total deposit of 30 million won.
However, with the inclusion of 'abolishing contribution limit carryover' and 'limiting contract terms to a maximum of five years' in this reform plan, the calculus has become more complicated. As a result, the strategy of setting the contract term as long as possible to enjoy tax benefits over a long period will likely become difficult to use.
Under existing ISAs, after the minimum maintenance period of three years, the maturity could be extended as desired. This made it possible to utilize the contribution carryover provision and invest in overseas index-tracking exchange-traded funds (ETFs) listed in Korea to gain long-term compounding effects under the low 9.9% tax. For this reason, among investors, the tip that "you should set your ISA account maturity as long as possible" became taken for granted.
In addition, if the maturity period was set long, it was possible to hold on to stocks or ETFs that had losses in an ISA account until they entered a revenue range.
But starting next year, as existing ISA accounts are revamped, it will likely become difficult to use such strategies. As a result, online communities are seeing a flurry of inquiries such as "Which securities firm extends maturities to 2999," with a so-called rush to catch the last train before maturity changes.
Securities firms explain that for ISA accounts opened through this year, the maturity can be set as long as possible. In addition, it is possible to extend the maturity of existing ISA accounts within this year.
However, all securities firms only accept ISA maturity extension applications starting "three months before maturity," so caution is needed. For example, if the point three months before account maturity falls on or before Dec. 31 this year, the investor can extend the maturity to the maximum this time. But for subscribers whose extension window rolls into next year, the reform will apply, making ultra-long extensions impossible.
Meanwhile, in the National Assembly, there are voices criticizing the ISA tax reform plan. Ahn Cheol-soo of the People Power Party said, "The newly created productive finance ISA limits investments to domestic assets, making overseas index ETFs off-limits," criticizing it as "pushing the entire public into becoming 'mindless Korean stock market' investors."
Lee Un-ju of the Democratic Party of Korea also noted, "This runs counter to the fundamental purpose of the ISA system, which is to help build assets through long-term investment," adding, "Long-term investment is possible only when investors can flexibly adjust the timing and size of contributions in line with their life cycles. Restricting carryover contributions and contract terms can significantly reduce that flexibility."
Generally, after the government unveils a tax reform plan in July–August, it is submitted to the regular National Assembly session in early September. It is then finalized after deliberation and resolution by the relevant standing committee and the plenary session. Since the ISA tax reform plan is still at the pre-legislation stage, there is room for some details to be adjusted as it goes through the National Assembly.