The government is considering ways to increase the retirement income deduction by raising the deduction amount by years of service for the first time in 32 years.
Retirement income tax is a tax levied by deducting a certain amount based on years of service and converted salary from severance pay.
Currently, the amount of deduction for each length of service is applied differently according to the length of service. If the number of years of service is 5 years or less, 300,000 won, between 5 and 10 years, 500,000 won, between 10 and 20 years, 800,000 won. For over 20 years, 1.2 million won is deducted according to the formula.
It is the first time in 32 years since the related system was introduced in 1990 that the deduction amount per year of service has increased.
As the amount of retirement income tax deductible increases, the tax base is reduced to the extent that it has the effect of reducing the tax burden.
Through this, the government is planning to reduce the burden on the majority of the working class and the middle class except for some high-income earners and reflect the rise in prices.
Previously, President Yoon Seok-yeol pledged not to impose retirement income tax until 50 million won in severance pay when he was a presidential candidate.
Specific plans for the increase will be announced in the tax law amendment bill in the second half of this year.
(Photo = provided by the Ministry of Strategy and Finance, Yonhap News)