Starting next year, the acquisition tax deduction limit for electric vehicles will be reduced from 1.4 million won to 700,000 won.
The government also decided to raise the deduction rates for acquisition tax and property tax for corporate agglomeration facilities such as venture and techno valleys to promote attracting corporations to areas with declining populations.
The Ministry of the Interior and Safety released on the 26th its 2026 local government tax reform plan with these measures.
Under the current Act on Restriction on Special Cases Concerning Local Taxation, when purchasing an electric vehicle, 100% of the acquisition tax is deducted up to a limit of 1.4 million won. This special acquisition tax deduction for electric vehicles is set to sunset at the end of this year.
The Ministry of the Interior and Safety (MOIS) will extend the special acquisition tax deduction for electric vehicles by three years to the end of 2029, but will cut the deduction limit by 50% to 700,000 won. A MOIS official said, "With the expansion of EV adoption, we achieved the original support goal," adding, "To ease the burden on local finances, we are reducing the acquisition tax deduction limit."
The acquisition tax deduction benefit for eco-friendly ships will also be redesigned from a rate reduction to an amount reduction. Under the current system, when a shipping corporation acquires an eco-friendly ship, the acquisition tax rate is reduced by 1–2%. MOIS plans to adjust the deduction basis to the acquisition tax amount and switch to a method that reduces 50–100% of the tax amount. A MOIS official explained, "Considering parity with other similar deductions, we redesigned the deduction method from a rate to an amount."
The reduction in local government tax expenditure resulting from the redesign of acquisition tax deduction benefits for eco-friendly electric vehicles and eco-friendly ships amounts to 172 billion won. It is the area with the largest expenditure decrease in this year's redesign of local government tax expenditure.
MOIS will also raise the acquisition tax deduction rate for energy-saving buildings as part of supporting carbon neutrality.
First, for energy-saving eco-friendly housing, the acquisition tax deduction rate will be raised from 10% to 20%.
For newly built structures certified as zero-energy buildings, the acquisition tax deduction rate will be raised from the current 15–20% to 20–30%. Those receiving Grade 1–2 certification will get a 30% deduction, and buildings with Grade 3–5 certification will receive a 20% acquisition tax deduction.
To support attracting corporations to the provinces, tax support benefits for venture corporation agglomeration facilities will be designed with three tiers: the greater Seoul area, non-capital areas, and areas with declining populations.
Previously bifurcated between the greater Seoul area and non-capital areas, the system now adds areas with declining populations, strengthening tax support.
If venture corporation agglomeration facilities such as university-industry cooperation halls established by regional universities or startup innovation parks, or new-technology startup agglomeration areas, are built in areas with declining populations, 50% of the acquisition tax and 75% of the property tax for five years will be deducted for project operators. Tenant corporations will receive a 60% acquisition tax deduction and a 75% property tax deduction for five years.
A local government tax deduction will also be newly established for social solidarity economy corporations. For social enterprises, social cooperatives, village enterprises, self-sufficiency enterprises, and social venture corporations, 55–100% of the acquisition tax will be deducted, and 55–100% of the property tax will be deducted for five years.
The basic deduction rate is set at 55%, and the rate is adjusted based on applicable conditions such as early-stage establishment (+15%), corporations with low taxpaying capacity (+15%), and location in non-capital or declining-population areas (+15%).
For NongHyup, the National Federation of Fisheries Cooperatives, credit unions, the Korea Federation of Small and Medium Business Cooperatives, forestry cooperatives, the Leaf Tobacco Producers' Cooperative, credit cooperatives, the Korean Federation of Community Credit Cooperatives (KFCC), and small and medium business cooperatives, 75–100% of the acquisition tax and property tax (for five years) will be deducted.
For the National Agricultural Cooperative Federation and the National Federation of Fisheries Cooperatives, a 25% deduction will be provided for acquisition tax and property tax (for five years).
The 2026 local government tax reform plan that MOIS released the same day will undergo a public notice process from the 27th to the 23rd of next month. It is then scheduled to be submitted to the National Assembly after deliberation by the Vice Minister meeting on Oct. 8 and approval by the Cabinet meeting on Oct. 13.