Starting next year, a young worker renting an apartment for 1 million won ($707) a month will be eligible for a tax credit of up to 2.04 million won at year-end settlement — an increase of up to 540,000 won from the current level. The government announced the enhanced tax credit as a follow-up to its 2026 tax reform package, aimed at expanding residential support for young people.
The Ministry of Land, Infrastructure and Transport said Wednesday it would raise the ceiling on the monthly rent tax credit from 10 million won to 12 million won per year to ease housing costs for young people and middle- and lower-income households. Workers between the ages of 15 and 34 will also see their monthly rent tax credit rate temporarily raised from 15 percent to 17 percent for three years.
Under the new rules, a young worker earning a total annual salary of 50 million won — who previously received a maximum credit of 1.7 million won, calculated at 17 percent of the 10 million won deductible rent ceiling — will see that credit rise to 2.04 million won next year, an increase of 340,000 won. A young worker earning 70 million won, who was previously credited 1.5 million won at the 15 percent rate, will receive 2.04 million won under the expanded ceiling, a gain of 540,000 won.
Workers without homes who do not qualify as youth will also benefit. Currently, non-homeowning workers earning up to 80 million won annually can claim a 15 or 17 percent credit on monthly rent within a 10 million won annual cap, depending on their income level. The revised rules raise that deductible rent ceiling to 12 million won per year — a 2 million won increase — to strengthen support for renters carrying heavy housing costs.
The expanded monthly rent tax credit will apply to rent paid from Jan. 1, 2027.
Meanwhile, the Ministry of Land, Infrastructure and Transport also approved value-added tax input credits for the purchase, lease and maintenance of autonomous driving passenger vehicles that have received temporary operating permits for research and development purposes.
Previously, VAT input credits on passenger vehicles were granted only in exceptional cases where the vehicles were used directly in certain industries such as transportation or automobile sales. The revision extends the credit to cover the purchase and lease of vehicles for autonomous driving research and development, as well as repair and maintenance costs incurred during testing and ongoing expenses such as consumables and fuel.
The changes will apply to vehicles purchased, leased or maintained during the taxable period in which the revised enforcement decree takes effect.
hss@heraldcorp.com
