The Day Interest Becomes Income
Money in a two-year deposit accrues interest over two years, but the tax calculation does not divide that interest between the two. Article 45 of the Enforcement Decree of the Income Tax Act fixes the timing of interest income.
For a deposit paying principal and interest together at maturity, the contracted payment date is the maturity date. Two years of accrued interest counts in one sum as income of the maturity year. Interest accrued in the first year is income of the maturity year, not of the first year.
Products paying interest monthly or quarterly divide across the years in which each payment date falls. On the same principal at the same rate, the amount falling into each year differs with the payment method.
Parking accounts work this way. Interest is calculated daily and paid monthly, so it never bunches into one year. Holding a large sum for a long time while keeping annual financial income down favors a product with a short payment cycle.
Tax is withheld at the point of payment too. 15.4% comes out when interest is paid, so a deposit paid once at maturity has it withheld once, and a monthly-paying product has it withheld monthly.
What Splitting Maturities Changes
This is KRW 400 million held for two years at 2.5% per year pre-tax. We compared holding it as one two-year deposit against splitting it into two one-year deposits.
KRW 3,080,000
The total interest income tax over two years under both arrangements. Splitting leaves the tax the same.
Calculated on simple interest with amounts below one won dropped. The 2.5% is used to show how the calculation works and is not a disclosed rate for any particular product.
The total tax is KRW 3,080,000 either way. Interest income tax is a flat rate that does not climb as the amount grows, so splitting alone does not reduce it. Receiving KRW 20 million in one year or KRW 10 million in each of two, the same 15.4% applies.
What changes is the financial income falling into a single year. One two-year deposit puts KRW 20 million into the maturity year at once; two one-year deposits put KRW 10 million into each year.
Two Systems That Assess on Annual Financial Income
The amount falling into a single year matters because two systems assess on the annual figure.
In the example above, one two-year deposit puts financial income of exactly KRW 20 million into the maturity year. Any other financial income at all takes it over the threshold. Split into two one-year deposits, each year holds KRW 10 million and leaves room.
Both thresholds are KRW 20 million, but they count different things. The tax side adds only interest and dividends; the health insurance side adds pension and employment income as well. Someone drawing a pension can be caught on the total even with KRW 10 million of interest.
Where the property tax base exceeds KRW 540 million, the health insurance threshold drops to KRW 10 million. In that case even the KRW 10 million from a one-year split reaches the line.
The tax itself sometimes does not increase on the switch to global taxation where there is no other income. Health insurance dependent status, by contrast, is lost the moment the line is crossed and a premium arises. The value of splitting maturities is larger on this side than on the tax side.
Splitting maturities does change the rate on offer, though. When two-year deposits carry higher rates than one-year deposits, splitting earns less interest.
Setting the rate difference at 0.2 percentage points, KRW 400 million over two years opens a pre-tax gap of KRW 1,600,000, or KRW 1,353,600 after tax. At a scale that does not reach either threshold there is no reason to split; at a scale that does, this figure can be set against the health insurance premium.
Splitting into one-year deposits means reopening at each maturity, taking whatever rate applies then. That favors a period of rising rates and works against a falling one.
Compounding Products and Early Closure
Products that add interest to principal and reinvest it have a different timing. Where a term adds interest to principal, the day it counts as income is the day it was added to principal under that term.
Under a structure adding interest to principal each year, it counts as income in each year it is added. It does not bunch at maturity; it divides across the years.
Early closure means receiving the money before the contracted payment date. The timing is then the day it was actually received, and it enters that year's financial income. Close in December and it counts that year; close after the turn of the year and it counts the next.
Where the threshold would be crossed by a small margin, moving the closure date alone changes the assessment. Early closure applies the early-closure rate rather than the contracted rate, though, so the interest received falls.
Early-closure rates are set lower the shorter the holding period. Closing a few months before maturity wipes out a substantial part of the accrued interest, so avoiding an assessment can cost more interest than it saves.
Checking the early-closure rate comes before moving the closure date. It is set out by holding period in the product terms.
Frequently Asked Questions
Does splitting maturities reduce the tax?
No. Interest income tax is a flat 15.4%, so splitting does not change the total. What changes is how much financial income falls into a single year, and with it the global taxation and health insurance assessments.
Isn't the day it lands in the account the reference?
The rule is the payment date under the contract. Only where the money is received before the contracted payment date does the day of actual receipt apply. For a deposit held to maturity, the maturity date is the contracted payment date.
What about products paying interest monthly?
They divide across the years in which each payment date falls. On the same principal and rate, a lump-sum-at-maturity product and a monthly-paying one put different amounts into each year.
When does interest on a compounding product count?
Where a term adds interest to principal, on the day it was added under that term. Under a structure adding it each year, it becomes income of each of those years.
Is there a difference between closing in late December and early January?
Yes. Early closure takes the day of actual receipt as its timing, so closing in December counts that year and closing in January counts the next. The early-closure rate applies either way, so the interest received falls.
Where do I see how much financial income I have?
The withholding tax receipt for interest income issued by the financial institution states the amount paid and the tax. Where it is spread across several institutions, each has to be checked and added.
How many deposits should I split into?
At a scale where annual financial income does not approach KRW 20 million, there is nothing to gain from splitting. When longer deposits carry higher rates, splitting earns less interest.
Sources and basis
- Timing of interest income — Enforcement Decree of the Income Tax Act article 45
- Deposit interest counts on the payment date under the contract; where paid before that date, on the day actually received
- Interest under a term adding it to principal counts on the day it was added under that term
- Global taxation threshold of KRW 20 million — 국세청 (National Tax Service) guidance on the taxation of financial income
- Income requirement for health insurance dependent status — 국민건강보험공단 (National Health Insurance Service)
- Calculation basis — principal of KRW 400 million, 2.5% per year pre-tax, simple interest, interest income tax of 15.4%
Tax law is subject to amendment. The law was verified on August 8, 2026.