Full tax deduction limit for hometown donation scheme should rise to 200,000 won this year, local governments say

Local governments that rely on the hometown love donation scheme to supplement their finances are calling for the full tax deduction ceiling to be raised from 100,000 won ($74) to 200,000 won.

The Sustainable Tourism Local Government Council held a forum at the National Assembly on Monday, urging the legislature and the government to complete an amendment to the Special Tax Treatment Control Act — raising the full deduction ceiling from the current 100,000 won to 200,000 won — during this year's regular session.

Anseong Mayor Kim Bo-ra, chair of the council, said in a forum presentation that the hometown love donation scheme had grown to raise 151.56 billion won ($112 million) nationwide in 2025 — a roughly 72.4 percent increase from the previous year — in the three years since its launch, but that donations were becoming ever more concentrated at the 100,000-won full deduction ceiling.

The share of donations at or below 100,000 won rose each year: 83.9 percent in 2023, 90.9 percent in 2024 and 98.4 percent in 2025. Some 62.5 percent of annual donations are made in November and December, when year-end giving peaks, yet the average per-donation amount in December stood at 104,000 won — actually lower than the annual average of 111,000 won.

"In a structure where the donor's burden rises sharply the moment a gift exceeds 100,000 won, the message reaching donors is still that 100,000 won is the most rational choice," Kim said.

Although the tax deduction rate for donations between 100,000 won and 200,000 won was raised from 16.5 percent to 44 percent starting this year, donor behavior has not changed.

Nationwide donations from January through June 2026 totaled 29.81 billion won, down 14.5 percent from 34.88 billion won in the same period last year, according to the forum materials. The average per-donation amount also fell 12.4 percent, from 127,824 won to 112,018 won, converging back toward the 100,000-won mark.

Kim proposed immediately raising the full deduction ceiling to 200,000 won, arguing that donors need "one clear standard they can understand at a glance — full tax deduction up to 200,000 won" rather than a complex adjustment of deduction rates. She suggested that any further expansion to 300,000 won or 500,000 won be considered in stages after evaluating the fiscal and policy effects.

Keeping the 30 percent cap on return gifts would also mean the maximum gift a donor could choose would double from 30,000 won to 60,000 won, which is expected to increase order volumes for local small businesses and return-gift suppliers.

At the forum, Buan-gun in North Jeolla Province said it had already raised 1.01 billion won this year, surpassing its 2025 target of 1 billion won, and that it was directing the fund toward four priorities: the elderly, youth, children and the environment.

A designated donation campaign to protect wild bees — "Please protect Bungbungi" — reached its three-year target of 300 million won in just one year, enabling the construction of three "bee hotels" and the operation of more than 80 types of return gifts along with donor invitation programs.

Buan-gun County Governor Kwon Ik-hyeon said the hometown love donation scheme "is expanding beyond simple giving into an experience that connects people with their regions."

Assembly member Kim Young-bae, who co-hosted the forum, said raising the full deduction ceiling to reflect current realities "is an important opportunity to lower the barrier to public participation and bring more citizens into the effort to transform their communities."

Assembly member Park Jeong-hyeon said that while adjustments to the deduction range had been tried, they "fell short of dramatically changing the flow of donations," adding that "it is time to seriously discuss raising the full tax deduction ceiling itself."

Park Yu-jeong, director of the balanced development promotion division at the Ministry of Interior and Safety, said the ministry would "actively consult with fiscal authorities and work to ensure the relevant bills that have already been introduced move forward."

The council said it plans to continue gathering on-the-ground views from its member local governments, based on the data and cases presented at the forum, and to recommend system improvements to the National Assembly and the government.