When you work as a freelancer or sole proprietor in Korea, you must manage your own taxes — unlike salaried employees whose employers handle withholding. To avoid scrambling every May during income tax filing season, it is crucial to prepare from early in the year. Proper tax planning can save you millions of won.
This guide covers the tax structure for freelancers vs business owners, 2026 tax brackets, deductible expenses, VAT filing, and key tax-saving strategies.
📑 Table of Contents
1. Freelancer vs Business Owner Tax Structure
Freelancers (personal service income earners) and registered sole proprietors have different tax structures in Korea.
| Category | Freelancer (3.3%) | Sole Proprietor |
|---|---|---|
| Withholding | 3% income tax + 0.3% local = 3.3% | No withholding (self-file and pay) |
| VAT | Exempt (personal services) | Taxable (10% of sales) |
| Expenses | Standard expense rate | Actual expenses (bookkeeping) |
| Best for | Revenue under 48M won, low expenses | Revenue over 48M won, high expenses |
2. 2026 Comprehensive Income Tax Brackets
Korea uses a progressive tax system — the higher your taxable income (income minus expenses minus deductions), the higher the rate.
| Taxable Income | Rate | Progressive Deduction |
|---|---|---|
| Up to 14M won | 6% | - |
| 14M ~ 50M won | 15% | 1.26M won |
| 50M ~ 88M won | 24% | 5.76M won |
| 88M ~ 150M won | 35% | 15.44M won |
| 150M ~ 300M won | 38% | 19.94M won |
| Over 1B won | 45% | 65.94M won |
3. Deductible Expense Checklist
The more expenses you can deduct, the lower your taxable income and tax bill. Here are common deductible items for freelancers and business owners.
01 Office & Workspace
- ✓ Office rent, maintenance fees
- ✓ Coworking space memberships
- ✓ Home office (proportional to area used)
- ✓ Internet and electricity (business-use portion)
02 Equipment & Software
- ✓ Computers, monitors, printers
- ✓ Software licenses (Adobe, MS Office, etc.)
- ✓ Cloud service fees
- ✓ Business phone bills
03 Transport & Travel
- ✓ Business transportation (taxi, transit, fuel)
- ✓ Business trip accommodation and meals
- ✓ Business vehicle expenses (insurance, maintenance, depreciation)