The government projected that tax revenue reductions will exceed 80 trillion won next year. This figure is more than 4 trillion won higher than the forecast for tax revenue reductions this year. When dividing tax expenditure beneficiaries by class, it was found that high-income individuals have a larger share than low-income and middle-class households, and that large corporations account for a larger proportion than small and medium-sized enterprises.
The Ministry of Economy and Finance noted during a Cabinet meeting on the 29th that it had approved the 'Basic Plan for Tax Expenditures for 2026.' The Basic Plan for Tax Expenditures refers to the 'plan for the operation and limitation of tax benefits' that the Ministry of Economy and Finance prepares annually and submits to each ministry following deliberation by the Cabinet in accordance with the 'Restriction of Tax Benefits Act.' This plan includes the 'ratio of tax savings,' which indicates the proportion of taxes the government should collect that are reduced for corporations and individuals.
According to the tax expenditure basic plan approved that day, it is expected that next year's tax revenue reductions will amount to 80.5277 trillion won. This is an increase of 4.558 trillion won compared to the forecast of 76.4719 trillion won for tax revenue reductions this year and an increase of 10.106 trillion won compared to the actual tax revenue reduction of 70.5171 trillion won in 2024.
The Ministry of Economy and Finance explained that tax revenue reductions next year will increase due to higher child tax credit amounts and an increase in integrated investment tax credits.
When considering the beneficiaries of tax revenue reductions, it is projected that the proportion of high-income earners and large corporations will grow. High-income earners refer to those with earned income of over 87 million won (200% of the average wage of all workers). Large corporations are defined as inter-subsidiary limited companies with total assets exceeding 0.5% of GDP (11 trillion won).
Next year, the tax revenue reduction amount for high-income individuals is expected to be 18.0369 trillion won, which is an increase of more than 1 trillion won compared to this year. The proportion of tax revenue reductions taken by high-income individuals among individual taxpayers is expected to increase from 34.8% this year to 35.1% next year, a rise of 0.3 percentage points.
The relatively large size of tax revenue reductions for high-income earners, the Ministry of Economy and Finance explained, is due to increases in social insurance-related deductions and credit card income deductions.
Next year, it is projected that among the tax revenue reduction amount for corporations (28.4713 trillion won), the amount for large corporations (4.7073 trillion won) will account for 16.5%, an increase of 0.8 percentage points compared to this year. The proportion of tax revenue reductions for large corporations in 2024 was only 9.8%. This means that it has significantly increased in 2025.
A Ministry of Economy and Finance official explained, 'As expenditures related to investment and research and development (R&D) by large corporations increase, the proportion of the tax revenue reductions received by large corporations among total corporate tax revenue reductions has grown.'