Who Can Open One and How Much Goes In
ISA stands for Individual Savings Account, and article 91-18 of the Restriction of Special Taxation Act sets its special tax treatment. Deposits, savings accounts, funds, and shares are held and managed in one account, and the interest and dividends arising there are calculated together.
The annual contribution limit is set by formula in the article. The remaining limit on your own account can be checked with the financial institution holding it.
The low-income type applies where set requirements are met, such as total salary of KRW 50 million or less, and doubles the exempt allowance. The determination is made on income records at opening, so which type applies can be confirmed at the counter before starting. A later rise in income leaves that contract's allowance unchanged.
The three-year contract term is the minimum for the tax treatment. Closing before three years brings tax back onto the amounts previously treated as exempt. Money needed within three years is better kept out.
The Allowance Applies to the Account as a Whole
What distinguishes an ISA is that products inside the account are not looked at separately. Where a deposit earns interest and a fund makes a loss, the allowance applies to the net gain across both.
In an ordinary account, tax comes off the interest and the loss sits separately. In an ISA the loss reduces the gain, so the amount subject to tax shrinks.
Deposit interest of KRW 3 million against a fund loss of KRW 1 million leaves a net gain of KRW 2 million. In an ordinary account, KRW 462,000 would come off the KRW 3 million of interest and the fund loss would remain; in an ISA the net gain of KRW 2 million falls within the general-type allowance and the tax is zero.
The 9% on the excess is also lower than the ordinary 15.4%. Attached to it is a provision that it is not aggregated into the global income tax base, so that amount also drops out of the global taxation of financial income test asking whether interest and dividends together exceed KRW 20 million.
Tax Removed at Each Level of Return
We compared the tax by the amount of interest and dividends earned in the account.
KRW 671,000
What a low-income-type ISA saves against an ordinary account on KRW 5 million of interest and dividends.
Calculated by applying 9% to the excess. The ordinary account uses interest income tax of 15.4%.
At KRW 2 million or less of interest and dividends, even the general type pays zero. Below that line there is no difference from the low-income type. In an ordinary account, KRW 308,000 would have come off that KRW 2 million.
The gap opens between KRW 2 million and KRW 4 million. At KRW 3 million the general type pays KRW 99,000 while the low-income type pays zero. At KRW 5 million the two are KRW 297,000 and KRW 99,000, a gap of KRW 198,000.
Where returns in the account fall short of KRW 2 million, the saving from an ISA is correspondingly small. Holding deposits alone at 2.5% per year takes KRW 80 million of principal to produce KRW 2 million of interest, and KRW 160 million to fill the KRW 4 million low-income allowance.
With a total contribution limit of KRW 100 million, filling the low-income allowance on deposits alone is difficult. Reaching KRW 4 million takes dividends or fund returns alongside. On a deposit-led plan, the difference between the general and low-income types is small in practice.
Moving Maturity Funds Into a Pension Account
Placing the balance into a pension account after an ISA contract ends includes that amount in the pension account's contributions and adds a separate tax credit allowance. How much is added is set at 10% of the amount transferred, capped at KRW 3 million.
On a maturity balance of KRW 30 million, 10% is KRW 3 million, which is added to the limit and raises that year's eligible amount to KRW 12 million. For someone on the 16.5% rate the amount returned becomes KRW 1,980,000, a difference of KRW 495,000 against filling the basic limit alone.
The additional allowance arises only in the year the balance is transferred. The pension account limit structure and the rates by withdrawal method are in the tax credit for 연금저축 and IRP.
Reaching the three-year mark and maturity allows opening a new account. A new contract brings a new exempt allowance.
That the allowance runs per contract matters. Completing three years and reopening creates another KRW 2 million or KRW 4 million allowance, so money intended to run for a long time uses more allowance by renewing at each maturity.
Whether transferring to a pension account or reopening is better turns on whether there is capacity to fill the pension account limit that year. Without that capacity, an extra KRW 3 million of allowance cannot be used.
Frequently Asked Questions
Does unused exempt allowance carry to the next year?
No. The allowance applies once to the net gain over the whole contract term. It does not accumulate at KRW 2 million a year.
How is the low-income type determined?
Set requirements such as total salary of KRW 50 million or less are confirmed on income records at opening. A later rise in income leaves that contract's allowance unchanged.
What happens if I close within three years?
The three-year contract term is a requirement for the special tax treatment. Closing before completing it brings tax back onto the amounts previously treated as exempt.
Does ISA interest count toward the KRW 20 million financial income threshold?
No. Even the amount above the exempt allowance taxed at 9% is, by the terms of the article, not aggregated into the global income tax base.
What happens to the tax if I make a loss?
The allowance applies to the net gain across the products in the account. Deposit interest against a fund loss is netted off before the calculation.
Which is better, the general or the low-income type?
Meeting the requirements makes the low-income type better automatically, with double the exempt allowance at KRW 4 million against KRW 2 million. Where account returns fall short of KRW 2 million, the two produce the same result.
Is it better to move maturity funds into a pension account?
Start with whether there is capacity to fill the pension account limit that year. Without it, an extra KRW 3 million of allowance cannot be used, and reopening an ISA for a fresh exempt allowance does more.
Can I hold deposits only?
Yes. Filling the exempt allowance on deposit interest alone takes a large principal, though. At 2.5% per year, KRW 80 million of principal produces KRW 2 million of interest.
Sources and basis
- ISA special tax treatment — Restriction of Special Taxation Act article 91-18
- Eligibility — aged 19 or over, or aged 15 or over with employment income in the immediately preceding tax period
- Contract term of three years or more · total contribution limit of KRW 100 million
- Exempt allowance — KRW 2 million general type, KRW 4 million low-income type (total salary of KRW 50 million or less, among other requirements)
- Rate on the excess of 9 hundredths · not aggregated into the global income tax base
- Additional allowance for ISA transfer amounts — Income Tax Act article 59-3, the lesser of 10 hundredths of the transfer amount and KRW 3 million
Tax law is subject to amendment. The law was verified on August 8, 2026.