Starting next year, the special consumption tax cut for hybrid cars will end as scheduled. For electric and hydrogen vehicles, the deduction cap will be gradually reduced from next year and abolished in 2029.
In the Ministry of Finance and Economy's "2026 tax reform plan," it said, "Of 241 tax exemption and deduction programs, we decided to overhaul 115." It said programs that have achieved their support goals or have low effectiveness will end, while programs that need support will be converted to fiscal support or redesigned and made permanent.
A representative program to be terminated is the special consumption tax cut of up to 700,000 won per hybrid car. The original deadline was the end of this year, but it will end without extension. For electric cars, the deduction cap will be reduced from the current 3 million won to 2 million won next year and 1 million won in 2028, then abolished in 2029. For hydrogen cars, the current 4 million won cap will drop to 3 million won next year and 1.5 million won in 2028, and end in 2029.
The government said it will support electric and hydrogen vehicles through subsidies. Currently, buyers of electric cars can receive purchase subsidies of up to 6.8 million won. If a combustion-engine vehicle that has been in service for at least three years is scrapped or sold and an electric car is purchased, a 1 million won transition grant is also paid.
The government also decided to apply only until the end of this year the special tax treatment for small and medium-sized enterprises maintaining employment, and the stamp tax exemption on loan documents and deposit and savings certificates for members of agricultural and fisheries cooperatives. The value-added taxes refund program for foreign tourists' lodging services will be operated only until the first half of next year and then end. Tax credits for childbirth, adoption, and marriage will be converted to fiscal support.