Inheritance and Estate Tax in South Korea

South Korea's inheritance tax (sangsokse, 상속세) sits near the top of global league tables. The National Tax Service (NTS) administers the levy under the Inheritance Tax and Gift Tax Act (Sang-sok-Jeung-yeo-se-beob). Unlike the Japanese system -- which taxes each heir's individual share -- Korea applies a single progressive rate to the entire net estate before it is divided, compressing all assets into the highest brackets first. That structural choice is a central driver of the reform debate currently before the National Assembly. See the South Korea country overview for broader tax-residency context.

What inheritance tax rates does South Korea apply?

Five progressive bands apply to the taxable estate after deductions are subtracted. Each band carries a progressive deduction to avoid cliff effects. The 50% top rate -- which has been in force for decades -- applies to the taxable base exceeding KRW 3 billion (approximately USD 2.2 million at mid-2026 exchange rates). Korea's estate-based approach means a KRW 6 billion estate shared equally among three children is still taxed as a single KRW 6 billion calculation at the 50% band, whereas the same distribution under a per-heir system would reach only the 40% band for each child. The Korean inheritance-tax burden on mid-to-large family estates is therefore structurally heavier than OECD peers using heir-based systems. AskKoreaLaw (2025)

What deductions reduce the taxable estate?

The taxable estate is calculated as gross assets at fair-market value on the date of death, less debts, funeral expenses (deductible up to KRW 10 million), and the following personal deductions. Heirs may choose between itemising personal deductions or taking the lump-sum deduction of KRW 500 million -- whichever produces the greater relief. Under the itemised route: the basic deduction is KRW 200 million; the spousal deduction ranges from a minimum of KRW 500 million to a maximum of KRW 3 billion, scaled to the spouse's actual inherited share; a deduction of KRW 50 million applies per qualifying child; a disability deduction of KRW 10 million multiplied by remaining life-expectancy years applies per disabled heir; a deduction of KRW 50 million per senior heir (age 65 or older) applies where relevant. Financial property (deposits, listed securities) qualifies for a 20% deduction capped at KRW 200 million. For qualifying family-business successions under Article 18, a deduction of up to KRW 60 billion may apply where the recipient descendant retains the business and its workforce for at least 7 years post-transfer. PwC Republic of Korea -- Individual Other Taxes (reviewed Jan 2026)

How does the controlling-shareholder premium work -- and was it eliminated?

Historically, heirs inheriting a controlling or largest-shareholder stake in a publicly-listed or large unlisted Korean company faced a 20% surcharge on top of the standard 50% rate, producing an effective top rate of 60% -- the highest statutory inheritance-tax rate in the world. The Korean government proposed eliminating this premium as part of its July 2024 tax reform package, which also proposed cutting the headline top rate from 50% to 40%. However, the full reform bill was rejected by the National Assembly in December 2024. The outcome for the 20% controlling-shareholder surcharge therefore depends on whether that specific provision was separable and enacted via presidential enforcement decree revision independent of the broader legislative package, or whether it remains in force pending renewed legislative action. As of the research date for this article (June 2026), the standard progressive rate table above (10%-50%) reflects the verified current law; the surcharge status requires confirmation with a qualified Korean tax professional before succession transactions involving controlling stakes are finalised. The Korea Herald -- July 2024 reform bill; Korea Herald -- December rejection context

What gift tax rules apply, and how do deductions vary by relationship?

Gift tax (jeungyeose, 증여세) applies identical 10%-50% progressive rates under the same Act and is levied on the recipient. Gifts are cumulated across the prior 10 years between the same donor-donee pair before the rate brackets are applied, preventing fragmentation of large transfers into smaller untaxed tranches. Relationship-based deductions (applied per 10-year cumulation window) are: spouse to spouse, KRW 600 million; lineal ascendant or descendant to recipient, KRW 50 million (KRW 20 million where the recipient is a minor); other relatives, KRW 10 million; non-relatives, KRW 10 million. From 2024, an additional KRW 100 million deduction applies on a one-time basis when a parent gifts property to a child in connection with marriage or childbirth, stacking on top of the standard lineal-descendant deduction of KRW 50 million. Lifetime gifts made to legal heirs within 10 years of death, or to non-heirs within 5 years of death, are pulled back into the inheritance base under Article 13; gift tax already paid is credited against the resulting inheritance-tax liability to prevent double taxation. GlobalTaxPlanner -- Korea gift tax deductions; PwC Korea Corporate Other Taxes (reviewed 2026)

What are the 2025-2026 reform proposals, and which are enacted?

Korea's inheritance tax system has been subject to intense reform pressure. The following clearly distinguishes enacted law from proposals as of June 2026.

Enacted (December 2025): The National Assembly passed 13 tax amendment bills on 2 December 2025. Relevant to inheritance and gift tax: the scope of controlled corporations subject to deemed-gift rules was expanded to include foreign corporations where the controlling shareholder holds 30% or more of shares (previously limited to domestic corporations, effective 28 February 2025). The rate structure and headline bands (10%-50%) were not changed by the December 2025 bills. Korea Herald -- December 2025 passage; PwC Corporate Other Taxes 2026

Proposed, not enacted -- acquisition-based system (target 2028): In March 2025 the government announced a plan to shift from the current estate-based model to an inheritance-acquisition system that taxes each heir's individual received share rather than the total estate. This would align Korea with 20 of the 24 OECD nations that levy some form of inheritance tax. The proposal includes: per-child basic deduction increasing tenfold from KRW 50 million to KRW 500 million; spousal exemption for the first KRW 1 billion regardless of legal share (currently minimum KRW 500 million); a minimum floor of KRW 1 billion across all inheritors combined. The government allocated 2026-2027 for supplementary legislation; target enforcement date is 2028. This reform has NOT been enacted. Korea Herald -- March 2025 revamp announcement; Korea Times -- acquisition system 2028

Proposed, not enacted -- spousal inheritance tax abolition: In March 2025, the ruling People Power Party submitted a proposal to abolish inheritance tax on spousal transfers entirely on the grounds that taxing property passing between spouses in the same generation constitutes double taxation. The bill had not cleared the National Assembly as of the research date. The Korean Law Blog -- IPG Legal (March 2025)

Proposed, not enacted -- headline top-rate reduction to 40% and surcharge elimination: These measures were part of the July 2024 government reform package and were rejected by the National Assembly in December 2024. The government indicated it still regards them as essential reform elements, but passage timing through the 2026 political cycle is uncertain.

The current statutory framework therefore remains 10%-50% with the five-band structure described above. Anyone planning an estate or large gift in Korea should model under current law and consult a qualified Korean Certified Tax Accountant (세무사, se-mu-sa) registered with the Korea Association of Certified Public Tax Accountants, as reform enactment could significantly change liability before a transaction closes. For jurisdiction-specific guidance, speak with a qualified tax professional.