Starting next year, the corporate tax rates for all taxable income brackets will be raised uniformly by 1 percentage point (p). This reverses the 1 p.p. corporate tax cut enacted through the 2022 tax reform under the previous Yoon Suk-yeol administration to its prior level, a move to restore the so-called "rich tax cut."
On the 2nd, the National Assembly held a late-night plenary session to process next year's budget bill and passed 16 budget-related bills, including an amendment to the Corporate Tax Act that contains these measures.
Under the current corporate tax, a progressive tax rate applies across four taxable income brackets: ▲ up to 200 million won, 9% ▲ over 200 million won to 20 billion won, 19% ▲ over 20 billion won to 300 billion won, 21% ▲ over 300 billion won, 24%.
With the amendment's passage, starting with next year's business income, the rates will each rise by 1 p.p. to ▲ 10% ▲ 20% ▲ 22% ▲ 25%. The increase in corporate tax revenue is expected to be reflected starting in 2027.
The plenary session also passed an amendment to the Education Tax Act that raises the education tax on financial and insurance businesses with revenue of 1 trillion won or more from 0.5% to 1%. Earlier, at the end of July, the government finalized the 2025 tax reform plan, including a corporate tax increase.
The People Power Party opposed the government's plans to raise the corporate tax and education tax during negotiations, but the bills passed the plenary session in their original government form under the automatic referral rule.
The ruling and opposition parties, however, reached a compromise on an amendment to the Act on Restriction on Special Cases Concerning Taxation that creates a new bracket over 5 billion won in the separate taxation of income from dividends received by investing in high-dividend listed companies and applies a top rate of 30% to that bracket.
The revised brackets for separate taxation of dividend income are ▲ up to 20 million won, 14% ▲ over 20 million won to 300 million won, 20% ▲ over 300 million won to 5 billion won, 25% ▲ over 5 billion won, 30%. Separate taxation of dividend income applies starting with dividends paid next year on the 2026 business year and will be in effect for three years until 2028.
Companies subject to separate taxation of dividend income are those with a dividend payout ratio of at least 40%, or those with a payout ratio of at least 25% that has increased by 10% or more from the previous year.