The government decided to draw up a revised draft of the tax reform bill that does not scale back benefits for individual savings accounts (ISA) and submit it to the National Assembly. Under this, general ISAs will continue to have no maturity limit, and if the annual contribution limit of 20 million won is not filled, the unused portion can be carried over to the next year to allow additional deposits.
An ISA is a financial product called an "all-purpose tax-saving account." In addition to deposits and installment savings, investors can put money into stocks, exchange-traded funds (ETF), and equity-linked securities (ELS), among other financial products. Revenue up to 2 million won (4 million won for the low-income type) is tax-exempt, and any revenue above that is subject to separate taxation at a 9.9% rate.
On the 1st, the Ministry of Economy and Finance said it finalized the "2026 tax reform plan" at a Cabinet meeting. Initially, the ministry sought to limit ISAs to a maximum contract period of five years and to ban carrying over any unused portion of the annual 20 million won contribution limit. It had also said the tax benefits for ISAs would be applied only through the end of 2029.
As public backlash grew, President Lee Jae-myung reportedly instructed in an internal meeting last month to "conduct a full reconsideration." Accordingly, a revised tax plan was prepared to maintain the current ISA system. The plan to apply the tax benefits for ISAs only through the end of 2029 was also withdrawn.