Multi-Child Families to Get Tax Break

The Ministry of Finance and Economy is planning to confirm an income tax reform bill at a public hearing on mid- to long-term tax reform in June and submit it to the National Assembly later in September.

Under the plan, double-income families with two or more children will continue to receive additional income tax deductions, while families with one child or no children will not.

The ministry decided to keep the income tax deduction system for double-income families of four in order not to increase tax burdens on every double-income family if additional deductions are no longer given to families with one or two children.

However, additional deductions will not be available to double-income families with one child, two-member double income families, two-member families comprised of a working parent and a child, and working single households.

A government official said, “Additional deductions for households with one or no children goes against the childbirth promotion policy, so it should be removed. But we kept the system for households with two or more children to relieve their burden.”

Current income tax laws state that double-income families can receive tax deductions and additional deductions if classified as one- or two-member households. However, their tax payments are expected to increase by about 700,000 won under the new measure as opposed to the unchanged payment for double-income families with two or more children.

For instance, a couple earning an annual income of 40 million won with one child will have to pay an additional 59,400 won to 280,500 won a year.

It is expected that double-income families with one or no children will oppose the government’s plan.